The Philippine office market is at a turning point. Following the government's comprehensive ban on Philippine Offshore Gaming Operators (POGO), the Manila commercial real estate market is undergoing structural adjustments. Latest industry data shows that traditional industries are rapidly filling the vacancies left by the withdrawal of POGO, driving the market towards recovery.
Real estate giant CBRE Philippines' latest analysis points out that industries such as IT and Business Process Outsourcing (IT-BPM), healthcare, and financial services are becoming the new main forces in the office leasing market. Jie C. Espinosa, President of CBRE Philippines, stated: "As the POGO exit nears completion, we expect the overall vacancy rate to fall below 20% by the end of the year. The market is experiencing a healthy industrial transformation."
Market data reveals the trajectory of this transformation. Since the official ban on POGO operations in August 2024, the office vacancy rate in the Greater Manila area has only fluctuated slightly, rising from 19.9% in the second half of last year to 20.1% in the first quarter of this year. More encouragingly, the net absorption area reached 161,500 square meters in the first quarter of this year, showing that market demand remains robust.
However, the transformation process still faces challenges. The current total vacant area in the Manila office market has reached a new high since 2022, totaling 966,700 square meters. Zonal data shows that Makati, Bay Area, and Quezon City are the hardest hit areas, accounting for nearly 70% of the city's total vacant area.
The industrial real estate market is relatively weak. In the first quarter, the absorption area of the industrial and logistics sector was halved quarter-on-quarter and declined by 45% year-on-year, with the vacancy rate in the CALABA region continuing to climb. Zoilo L. Paras, a capital market expert at CBRE, analyzed: "Manufacturing clients are generally taking a wait-and-see approach, especially awaiting possible policy shifts after the US elections."
Despite short-term pressures, industry insiders remain cautiously optimistic about the market outlook. With the gradual resolution of POGO's legacy issues and the continuous release of demand from emerging industries, a more stable recovery cycle is expected in the second half of 2025. This policy-driven market reshuffle is promoting the transformation of Manila's commercial real estate towards a more sustainable development model.
