The office vacancy rate in Metro Manila is projected to reach 20.5 percent by the end of the year, influenced by the influx of new office spaces and the exit of Philippine offshore gaming operators (POGOs), as reported by Colliers Philippines.
According to the property management consultancy firm, the increase in the vacancy rate was driven by flat net demand in the market, primarily due to POGO departures. This projection is slightly higher than the July estimate of a 19 percent vacancy rate.
By the end of the third quarter, office space vacancy increased to 18.6 percent, up from 18.3 percent in the previous quarter, largely due to lease terminations by POGOs and the non-renewal of leases from before the pandemic.
An additional 157,000 square meters of office space currently occupied by POGOs are anticipated to become available by the fourth quarter, as these operators have officially informed their landlords of their non-renewal intentions. In the third quarter alone, 57,000 square meters were vacated, marking the immediate impact of the POGO ban implemented following the president’s closure directive in July.
On the supply side, Colliers forecasts an addition of 119,000 square meters of office space by the fourth quarter. Looking ahead to 2025, the market is expected to see 615,000 square meters of new office stock, primarily located in Cubao, North Edsa, and the Bay Area.
Average office rents are projected to remain stable by the end of the year, though the situation may vary for different office occupiers based on building occupancy, age, and each landlord’s portfolio.
Regions heavily impacted by POGO activities, such as the Bay Area, may experience declining rents, while areas like Makati, Fort Bonifacio, and Ortigas are likely to see marginal rent increases due to lower vacancy rates.
Colliers has observed improvements in transaction volumes for office spaces, driven mainly by the information technology and business process management sectors, along with traditional office users.
The market is expected to remain stable despite recent regulatory updates, with confidence in the emergence of further opportunities, particularly in light of upcoming events such as the US elections and new legislation like the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE Act).
In a previous report following the announcement of the POGO ban in July, industry insiders predicted that rental rates for residential spaces could drop by 50 percent, while the vacancy rate for residential units in Metro Manila is projected to rise from the current 17 percent to 19 percent.
Speaking at the time, David Leechiu, CEO of Leechiu Property Consultants, highlighted that rents could decrease significantly, making it more difficult to find tenants, who are likely to be predominantly local rather than foreign.
Leechiu pointed out that POGO and POGO-related tenants have played a significant role in this market. Despite the expected drop in rental rates, he expressed confidence that both the high-end and low-end segments should remain stable.
