The Philippine office market in the first quarter of 2025 demonstrated a 7 percent increase in demand to 355,000 square meters (sqm) from 331,000 sqm in the first quarter of 2024, despite the absence of Philippine Offshore Gaming Operators (POGOs) and demand from government-related deals.
Leechiu Property Consultancy (LPC) in its First Quarter 2025 Philippine Property Market Report said that the increase was largely driven by the IT-Business Process Management (IT-BPM) sector, predominantly from Global In-House Centers (GICs), which continue to view the Philippines as a strategic outsourcing destination. Notable sub-sectors include companies that are in the healthcare and financial industries
Mikko Barranda, LPC director for commercial leasing, reported that in the first quarter this year, the Ortigas/Mandaluyong/San Juan area recorded the highest number of lease transactions, totaling 59k sqm, reflecting growing interest in emerging submarkets offering competitive rental rates. Meanwhile, Bonifacio Global City has already absorbed 51k sqm—equivalent to 40% of its total demand from 2024 (126k sqm)—within the first quarter of 2025 alone.
Vacancy
In terms of vacancy rate, Barranda said that the number of vacant office spaces declined from 312,000 sqm to 277,000 sqm, primarily driven by the continued exit of POGOs. “With the pace of these exits tapering off, we expect contractions to ease further in the coming quarters,” said Barranda.
The nationwide office vacancy rate held steady at 17 percent in Q1 2025, marking a slight improvement from the previous quarter’s 18%.
While vacancy remains in double digits, the decline reflects a gradual recovery, driven by sustained demand and a slowdown in space contractions. Vacancy is expected to trend further downward in the coming quarters, particularly in core central business diestricts such as Makati and BGC, as active leasing requirements begin to convert into signed deals.
The Philippine office market is projected to achieve a net take-up of 490,000 sqm by end-2025, representing a 16 percent year-on-year increase.
This growth will be fueled by strong leasing activity, particularly from the IT-BPM sector, and a continued slowdown in space contractions—largely due to the tapering of POGO exits that had previously dampened market performance.
“The office market in the Philippines continues to show grit in the face of global and local challenges. The IT-BPM sector remains to be a reliable key driver of growth, while traditional office tenants are also increasingly active. With a promising outlook for the rest of the year, we expect resiliency amidst potential headwinds,” said
Barranda.
