GLOBAL geopolitical developments have not visibly dented the Philippine office property market, with transactions and vacancies remaining stable. But developers, landlords and occupiers are taking the “wait and see” stance, while favoring flexible leases and controlled supply as they brace for the potential impact of the global energy crisis and ongoing geopolitical conflicts. This was reported by real estate advisory firm Colliers Philippines at the firm’s virtual Q1 2026 Philippine Market briefing on April 30.
“Vacancy rates are holding steady at 19 percent across the board, and actually in most Metro Manila submarkets, with 73K sqm net positive take-up due to sustained transactions activity and lower space surrenders,” Colliers Philippines Director for Office Services-Tenant Representation Kevin Jara said.
According to Jara, while about 500,000 sqm is expected to be delivered at year's end, building supply starting 2027 is projected to significantly drop to 200,000 sqm as developers move to cushion the anticipated impact.
He added that effects of the fuel crisis could be felt by the second quarter of the year, noting that developers are taking a proactive approach for the next quarters in light of the “volatility and uncertainty” of the geopolitical environment. The effects of the flood corruption scandal that erupted in Q3 2025 last year did not have a major impact on the first quarter of 2026, as expected. “There was a dip in Q4, but that quickly rebounded in Q1 this year,” he said.
The firm is keeping its year-end forecast for vacancy rate at 19 percent and for net take-up at 400,000 sqm, as “we have yet to see the impact of the ongoing conflict in the Middle East in the next 9 months ahead,” Jara said.
Collier’s sensitivity analysis to the global energy crisis indicated the office market could see up to 30 percent growth in overall activity, with vacancies expected to decline significantly from 2027 to 2030 due to the controlled building supply, despite prevailing “market headwinds," Jara said.
Office transactions remained stable with 193,000 sqm in Metro Manila, representing a 12 percent year-on-year (YoY) increase. Fort Bonifacio continues to dominate office space deals, followed by Makati and Alabang Central Business Districts (CBDs). Notable deals during Q1 included Reckitt in Fort Bonifacio, Omnicom Group in Makati and Infosys in Alabang.
Jara noted the trend in Makati transactions showing an increase in deals involving aged buildings that are 30 years old and beyond.
Traditional firms accounted for two-thirds of the total deals, while outsourcing and shared services made up 34 percent.
Iloilo outperforms Cebu
Key office markets outside Metro Manila suffered a sharp drop in transaction volume, with only 37,000 sqm, a 32 percent slump YoY. Transactions in Cebu, in particular, plunged to 9,000 sqm for Q1 2026 from 20,000 sqm in the same period in 2025. Iloilo took the lead with 16,000 sqm — more than a third of total deals — outperforming Cebu.
In terms of vacancy rates, there was a general improvement, with Cebu at 16 percent. However, Jara pointed out that this figure is actually lower within the Cebu IT Park at 13 percent and Cebu Business Park at 12 percent. Most of the upcoming 200,000 sqm stock expected in 2026–2029 will be located outside Cebu City’s CBDs, where office space is dwindling, and in other sites such as the Mandaue reclamation area, Jara said.
Flexible models for the future
Real estate industry stakeholders are increasingly looking at flexible workspaces. Across Metro Manila, Colliers recorded a 26 percent YoY growth in flexible space supply in the first quarter of 2026. An alternative to the traditional office, flexible space is one strategy to address the uncertainty of the market, Jara said. Flexible workspace allows locators the ability to mitigate geopolitical risks, providing them with shorter-term, plug-and-play setups, minimal Capex investments, and immediate operational readiness.
Jara highlighted another option: The OpEx (Operational Expense) model, which combines the benefits of traditional office benefits with those of the flexible workspace. With build-to-suit and rent-amortized solutions, this model can help firms navigate uncertainty while preserving their Capex, Jara said.
Colliers recorded 66 percent of transactions or two-thirds of deals, occurring near existing transit stations or hubs such as the Grand Central Station and the ARCA South Integrated Terminal, both targeted for completion in 2027, and the Metro Manila Subway Project, which will be fully completed by 2032. Jara said that this trend is yet another response to navigate the ongoing crisis.
Because of this alignment with transit-oriented developments, developers, along with local government units (LGUs), are taking steps to enhance the “first and last mile journey experience of commuters." The Ortigas walkway, Century City Shuttle, and the MMDA Pasig Ferry Service are examples of these improvements.
To prepare for market shifts and build resilience, Jara suggested that developers consider the flexible and opex office delivery models and transit-oriented developments in their site-selection strategy, as well as refurbish older office assets to remain competitive. For locators, he advised early lease reviews to secure favorable terms.
