Manila Q2 office absorption reaches 40,400 sqm as vacancy falls

Office vacancy fell to 13.8% amidst resilient occupier demand.

Manila's office market recorded strong leasing momentum in the second quarter of 2026, with net absorption reaching 40,400 sq m, driven by corporate activity in Taguig and Makati, according to JLL.

Taguig City accounted for significant activity, including a 3,250 sq m lease by a logistics company and a 2,180 sq m transaction involving a construction firm. In Makati, a media company leased 1,660 sq m, while consumer goods and manufacturing companies secured a combined 2,500 sq m.

No new office supply entered the market during Q2, as projects originally scheduled for completion were delayed until the third quarter. JLL said around 202,200 sq m of office space remains in the pipeline for delivery by the end of 2026.

The combination of sustained leasing demand and the absence of new completions helped drive the vacancy rate down to 13.8%, a decline of 80.9 basis points from the previous quarter.

Rents also continued to rise. Average monthly office rents increased 1.8% quarter-on-quarter to PHP1,108.1 per sq m, with JLL attributing the growth to rental escalations as occupancy levels improved.

Capital values rose a more modest 0.3% during the quarter to PHP190,594 per sq m, reflecting continued investor confidence despite a cautious investment environment.

JLL expects demand from IT-BPM, technology, financial services, flexible workspace operators and construction companies to support absorption of the substantial supply due later this year. The consultancy said companies pursuing flight-to-quality strategies should continue to favour premium office space.

Rental rates could face further upward pressure as well-occupied existing buildings meet new premium developments entering the market at higher price points. Capital values, however, are expected to remain under some pressure as elevated interest rates continue to encourage investor caution.