METRO MANILA is facing a concentration of office building completions in the final quarter of 2026 after construction timelines for major developments shifted from the third quarter, according to property consultancy Savills Philippines.
Only 16,900 square meters (sq.m.), or about 9% of the 183,400 sq.m. of Grade A office space expected for delivery in the third quarter, was completed during the period, Savills said in its latest report.
Three major developments — Yuchengco Centre, Offices at the Galleon, and SM North EDSA Tower 5 — were moved to the fourth quarter, contributing to a larger concentration of office supply scheduled for completion before yearend.
Including Southfield Center and Spectrum, approximately 231,600 sq.m. of new office space is now scheduled for delivery in the fourth quarter.
This accounts for about 70% of the 329,800 sq.m. in total office completions projected for 2026, according to Savills.
The consultancy did not specify the reasons for the changes in the projects’ completion schedules.
The anticipated increase in office supply comes as Metro Manila’s Grade A office market recorded negative net take-up in the third quarter, reversing six consecutive quarters of positive absorption.
Net take-up fell to negative 23,900 sq.m. from positive 144,700 sq.m. in the second quarter, marking the first negative quarterly reading since the fourth quarter of 2024.
Gross leasing reached 118,200 sq.m., but this was outweighed by 142,100 sq.m. of space returned to the market as companies consolidated, relocated, or reduced their office footprints.
Metro Manila’s overall office vacancy rate rose to 19.2% in the third quarter from 18.9% in the preceding quarter.
The increase in vacant space, combined with the upcoming building completions, could push the vacancy rate above 20% by yearend, Savills said.
The consultancy estimated that approximately 1.96 million sq.m. of Grade A office space stood vacant at the end of September, following a 40,700-sq.m. increase during the quarter.
The 231,600 sq.m. of office space scheduled for completion in the fourth quarter is equivalent to about 2.3% of the market’s existing stock.
Savills said the potential increase in vacancy would depend partly on current pre-leasing levels, with the largest increases expected in districts facing substantial new supply.
DISTRICT OUTLOOK
Makati’s central business district (CBD) is among the markets expected to face additional vacancy pressure as new office space becomes available.
Savills said the upcoming completion of Yuchengco Centre could push Makati CBD’s vacancy rate to around 23% by yearend from 20.9% in the third quarter.
The district recorded negative net take-up of 2,100 sq.m. during the period, ending four consecutive quarters of positive absorption.
Gross leasing declined to approximately 13,700 sq.m. from 24,800 sq.m. in the preceding quarter.
Despite weaker demand, average monthly office rents rose by 0.8% to P999.50 per sq.m., marking a third consecutive quarterly increase.
In Quezon City, vacancy climbed to 23.1% from 19.8% in the second quarter, the sharpest increase among the districts covered by Savills.
The district recorded negative net take-up of 30,900 sq.m., the weakest performance in Metro Manila, largely due to a major tenant relocation.
Savills projected that Quezon City’s vacancy rate could rise to around 26% by yearend as additional office space is completed.
Meanwhile, Ortigas Center recorded positive net take-up of 7,800 sq.m. in the third quarter, although this was lower than the 14,800 sq.m. recorded in the preceding quarter.
Its vacancy rate improved to 18.6% from 19.2%, marking a fourth consecutive quarter of tightening.
However, about 81,700 sq.m. of office space is scheduled for completion across the fourth quarter of 2026 and the first quarter of 2027, equivalent to roughly 6% of the district’s existing stock.
Savills projected that the additional supply could push Ortigas Center’s vacancy rate back to around 22% by early 2027.
The Bay Area, which recorded positive net take-up of 11,600 sq.m. in the third quarter, also faces additional supply.
Its vacancy rate remained at 35.3%, the highest among the established business districts covered in the report.
Savills expects Bay Area vacancy to rise to around 36% by yearend and remain near that level through 2027 as more office space enters the market.
RENTAL CONDITIONS
Despite the increase in overall vacancy, average Metro Manila Grade A office rents rose by 0.5% quarter on quarter to P861.10 per sq.m. per month, marking a third consecutive quarterly increase.
Alabang CBD recorded the strongest quarterly rental growth at 2.8%, followed by Ortigas Center and Quezon City at 1.5% each.
Bonifacio Global City was the only major district to record a rental decline, with average monthly rents easing by 0.4% to P1,089.60 per sq.m.
Savills said competitive rents and a wider selection of available office space could encourage startups and expanding companies to establish or increase their presence in Metro Manila.
However, the substantial volume of new office completions scheduled for the final quarter is expected to keep leasing conditions favorable to tenants, particularly in districts with elevated vacancy rates. — Juliana Chloe A. Gonzales