PROPERTY developers in the Philippine office market have become more strategic during the first half of 2026. Many have chosen to prioritize addressing their current vacancies before embarking on new projects. The IT-BPM companies, still the market’s main driver, are eyeing other cities beyond Cebu, Davao and Pampanga as they consider expansion outside Metro Manila. The flexible workspace sector is growing as companies opt for more hybrid or remote work arrangements.
The conservative pipeline maintained by the National Capital Region (NCR) developers can be seen in Central Business Districts (CBDs), which have a 19 percent vacancy. The total (or current and pipeline) supply dropped from 655,673 sqm in Q2 2025 to 326,307 sqm in Q2 2026. In contrast to the pre-pandemic forecasted supply of 1 million sqm a year, NCR property developers are anticipating only around 700,000 sqm of new office supply annually from 2026–2029.
According to the analysis given by the Lobien Realty Group (LRG) in their July 9 media briefing on the office market in the first half of 2026, all these numbers reflect “developers' preference for absorption over aggressive expansion.”
The developers “are not just building here and there. The supply went down by actually more than 80 percent,” said LRG founder and CEO Sheila Lobien. From 2025 to 2026, Quezon City experienced a drop in total supply from 2,259,185 sqm to 742,757 sqm; Makati, from 3,292,605 sqm to 615,186 sqm; and Taguig, from 3,052,578 sqm to 557,011 sqm.
Lobien said that demand can also be seen in the uptick of rental prices, which now averages P1,000 per sqm in the CBDs. She added that “the rental rates have been very resilient... Makati, the southern and northern parts of Metro Manila areas are the ones reporting the increase in rental rates. There is demand. Companies are leasing space, taking space, or going to a better, newer place.”
While the developers’ clients, especially IT-BPMs, tend to gravitate to Makati and Bonifacio Global City, Quezon City has been attracting its fair share of customers because of its affordability and proximity to universities, which produce talent for the workforce every year.
The briefing cited data from the IT-Business Processing Association of the Philippines: the workforce “could reach around 2.5 million employees by 2028, implying roughly 150,000 to 200,000 new jobs annually.” The LRG report estimated “close to 500,000 sqm of office space in 2026” partly to host those new members of the workforce.
Supporting infrastructure
Beyond the NCR, many BPOs have set up shop in Cebu, Davao and Pampanga. But the LRG report noted a movement of demand toward the Department of Information and Communications Technology's (DICT) Digital Cities in 2026. These rising “municipalities offer competitive setups, tax incentives, and a highly capable provincial talent pool.” A few examples are Batangas City, Cabanatuan City, Dagupan City, General Santos City, and Iligan City, just to name a few.
The office market across all provincial business districts has an 18 percent vacancy. The total supply went down from 234,052 sqm in Q2 2025 to 190,447 sqm in Q2 2026. Pampanga has the most available space with 145,000 sqm (from 422,234 sqm, 2025), followed by Cebu with 123,000 sqm (from 1,177,760 sqm, 2025) and Cavite with 98,000 sqm (from 159,903 sqm, 2025).
Alex Regala, LRG director of sales and strategic partnership, named some of their causes: “the slowing down of the completion of projects and developments in response to oversupply or a delay in other developments.”
At the same time, he noted that the average rental rate in these locations “has gone up from P570 per sqm to P600 per sqm." Also giving Regala more reasons to have a “glass-half-full” perspective is the Luzon Spine Expressway Network, the P9 trillion comprehensive national infrastructure roadmap to be laid out by the Department of Public Works and Highways that will stretch from Ilocos to Bicol.
He added that currently the “high-capacity arterial road projects — like the Cebu Cordova Link Expressway (CCLEx), North Luzon Expressway (NLEx), and South Luzon Expressway (SLEx) — are drastically reducing inter-regional transport bottlenecks, transforming the provinces into viable corridors.”
Regala expressed his hope that once the economy improves, “there will be more demand for office space... there is so much room for expansion.”
Finally, another growth area is the flexible workspace market, numbering more than 230 in the NCR, and occupying about 600,000 sqm throughout the Philippines. It is estimated to grow by 600 percent by 2030.
Lobien said that despite the uncertainty brought about by the Middle East crisis, “the real estate sector as an industry is one of the top contributors in the Philippine economy with a 6.8 percent growth. When we look at the data, real estate prices continue to go up.”
LRG is one of the Philippines’ fastest-growing commercial real estate consultancies, providing strategic advisory and transaction services across office, industrial, retail, investment and project leasing.
