Steady tenant move-ins drive continued positive office absorption

• Net absorption increased to approximately 27,800 sqm as leasing activity remained constant. Taguig City stood out, securing key deals including a 4,200 sqm BPO lease and a 2,000 sqm ICT firm commitment, highlighting the area’s steady preference among firms.
• Makati City also added to the lease volume with a 1,000 sqm BPO lease. However, the market had some turnover, as seen when a BPO firm left an 1,800 sqm facility in Taguig City, reflecting a dynamic landscape of expansion and rightsizing in the office sector.

No supply is completed in Q4 2024 due to delays in some developments

• No new office completions in Q4 2024, as Bamberton Center in Taguig City shifted its launch to 2025. The delay has boosted the projected 2025 supply to 206,471 sqm, potentially impacting office vacancies in the coming year.
• Vacancy rates dropped to 16.8% in Q4 2024, marking a 57.0 bps quarterly decrease. The improvement was driven by steady occupancy gains in select buildings across Makati City and Taguig City, as well as a lack of new supply.

The office sector sees stagnant rents, while prices rose

• Office rents held steady at PHP 1,127.2 per sqm monthly in Q4 2024. Landlords mostly maintained rates to remain competitive and attract tenants.
• Office capital values rose 2.2% to PHP 186,522 per sqm in Q4 2024, indicating a stable investment climate. Further appreciation is expected as the central bank considers rate cuts amid controlled inflation, potentially boosting investor confidence in the sector.

Outlook: Slow rent growth expected as landlords navigate high office supply

• Rent stability is expected for most properties amid high supply. Prime and well-occupied buildings may increase rates, possibly elevating market averages. Capital values are projected to climb steadily, driven by anticipated interest rate reductions.
• Office leasing is set to stabilise as firms finalise work arrangements. POGO closures are expected to impact Makati CBD, but BPO and corporate expansion are poised to support the market. However, rightsizing trends may continue as firms settle office space needs.