Office demand increased 56% in first 6 months

The Philippine office market showed resilience and growth in the first half of 2024, according to Leechiu Property Consultants Inc. (LPC).

Transactions increased 24 percent from the same period last year, driven by the IT-business process management sector and government agencies, LPC said.

“Net office demand in the first half of 2024 surged 56 percent,” said LPC director Mikko Barranda. “However, the sector remains under pressure due to new supply entering the market in the second half of 2024.”

Barranda noted a “flight to quality” trend, with traditional offices relocating and expanding to newer spaces. “Live demand gives us optimism, as we see numerous transactions still in the pipeline for the second half of 2024,” he said.

The office market’s strong performance was fueled by two key sectors: IT-BPM, which experienced a 13-percent year-on-year jump in transactions and government agencies, whose leasing activity increased by over sevenfold from the first half of 2023 to the first half of 2024.

Overall transaction activity in the first half of 2024 included 268,000 square meters (sq. m.) for IT-BPM offices, followed by traditional offices (229,000 sq. m.), government offices (113,000 sq. m.), and Philippine Offshore Gaming Operators (75,000 sq. m.).

LPC said most occupiers gravitated towards newer buildings or those five years old or less.

Metro Manila remained a preferred location for office space. In the second quarter of 2024, the Bay Area and Makati City captured a combined total of 155,000 sq. m., representing a significant 44-percent share of national demand.

Government activity fueled 68 percent of the demand in the Bay Area. Outside the capital region, Cebu maintained its position as the provincial leader.