Data from Leechiu Property Consultants saw an eight percent increase this year in overall office space demand from 2022, which equates to 1.1 million square meters of newly leased space. This translates to a decrease in the overall vacancy to 18 percent from 19 percent.

"The Philippine office market performed better than expected this year amid geopolitical uncertainties and looming fears that hybrid work will cause the market to contract significantly similar to major cities globally," Mikko Barranda, director for commercial leasing at Leechiu Property Consultants, said.

Leechiu states that Metro Manila recorded 79 percent of the newly leased space, with the Bay Area at 26 percent majority of which are taken by POGO companies.

For areas outside Metro Manila, Cebu and Clark receive the highest take-up at 54 percent and 17 percent. Majority of these spaces were leased out by IT-BPM tenants.

IT-BPM demand hovered around 500,000 square meters annually before the hybrid work setups were adopted, Leechiu Property added.

"The remaining space was leased by traditional occupiers who are driven by the flight to quality behavior as they moved to more efficient and cost-effective buildings," Leechiu Properties added.

However, Barranda added, "there is still a significant pipeline of buildings and office space that will be introduced to the market which, taken with forecast demand, will cause a gradual decrease in vacancy rates in the coming periods."