The recent report by real estate services firm CBRE revealed a “demand paradox” in the Metro Manila office market: improved vacancy rates and low demand.
Office demand hit a five-year low of 161,160 sqm in the second quarter of 2026 — a sharp 37 percent decline in transaction count from Q1 (109 transactions vs. 173). True underlying market demand stood at only 111,060 sqm, as pre-leasing activities and internal developer transfers accounted for nearly a third of the reported figures.
Metro Manila’s overall vacancy rate tightened slightly to 19.2 percent from 19.5 percent in Q1 2026 and 20.3 percent in Q4 2025. According to CBRE, this artificial tightening is driven entirely by the supply side, as real estate developers freeze new construction launches, rather than a genuine surge in occupier absorption.
The report also noted the following:
Eighty-two percent of all national real estate demand was concentrated in Metro Manila during Q2, as occupiers consolidated into core locations while provincial demand dropped by 29 percent quarter on quarter.
While the IT-BPM sector maintained a 55 percent share of total demand volume, it represented only 28 percent of transaction count. Traditional corporate occupiers accounted for 65 percent of total transactions but smaller footprint sizes.
CBRE emphasizes that the IT-BPM sector is no longer the explosive growth engine it was over the past decade, performing at only 65 percent of its three-year average in Metro Manila. Occupiers are right-sizing footprints amidst global economic uncertainties and AI-driven workflow efficiencies.
Total vacated office stock remains stubbornly above 1.01 million sqm for the fourth consecutive quarter. This accumulated secondary inventory equals 2.5 years of new supply that developers must contend with.
Major national developers secured 66 percent of Q2 demand share, led by Robinsons Land (38,000 sqm), SM Prime (28,400 sqm), Megaworld (21,200 sqm), Ayala Land Offices (14,100 sqm), and Innoland (6,900 sqm). SM emerged as the counter-cyclical winner with a +62 percent YoY gain in 1H leasing.
