Office market sustains positive net absorption, with Taguig City leading market activity driven by IT-BPO and financial services

• The office sector continued momentum with 18,100 sqm of absorption, with activity concentrated more in Taguig City. Anchor deals from IT-BPO and financial services companies drove 15,600 sqm of demand in Taguig, while corporate occupiers added 900 sqm in Makati City.
• Space optimization and flight-to-quality trend continued across key districts with a BPO firm vacating 1,100 sqm in Makati City and corporate occupiers leaving 1,400 sqm in Taguig City.

Vacancy rates remain stable amid balanced occupancy shifts across key markets

• Q4 saw completion of two office developments totaling 33,800 sqm, while other projects shifted to Q1 2026 due to completion delays. The development pipeline remains strong with approximately 297,300 sqm of new office supply scheduled for delivery by year-end.
• Q4 2025 saw a modest vacancy rate uptick to 14.1% from the previous quarter’s level—a rise of 22.4 basis points. This increase primarily stemmed from the delivery of new developments in Taguig City.

Rental rates persist at stable levels as capital values climb moderately

• Monthly rents sustained at PHP 1,089.4 per sqm throughout Q4 2025, reflecting landlord emphasis on tenant stability over rental growth amid market pressures.
• Capital values climbed modestly by 1.2% in Q4 2025, reaching PHP 189,828 per sqm and indicating sustained investor confidence.

Outlook: Steady growth trajectory expected with robust 2026 development pipeline and consistent leasing momentum

• Sustained leasing from IT-BPO, technology and financial services sectors are projected alongside flight-to-quality trends, though the considerable supply influx could drive landlords to enhance tenant packages and rate competitiveness to retain occupancy levels.
• New supply additions could apply downward pressure on rental rates, though premium buildings are projected to maintain existing rates. Capital values are anticipated to stay steady with potential for growth as interest rates stabilize.