Despite the massive exodus of Chinese workers involved in Philippine Offshore Gaming Operators (POGO), the country’s office market experienced a remarkable resurgence in 2024, with overall net absorption reaching an impressive 282,600 square meters, a 290 percent increase from the previous year.

The growth was largely driven by significant leasing activities in Bonifacio Global City (BGC) and the Bay Area, signaling a robust recovery in these key districts.

In a recent study of KMC Savills dubbed “The 2025 Panorama,” government agencies emerged as the second-largest demand driver for office spaces, particularly in the Bay Area.

The completion of 448,000 square meters of office space in 2024 further bolstered the market, although an additional 200,000 square meters of planned space faced delays and are now expected to be completed in 2025.

Despite the influx of new office buildings, only two out of ten completed structures are fully leased to a single tenant.

The remaining buildings have occupancy rates ranging from 25 to 33 percent, with some still entirely vacant.

Looking ahead, the Bay Area and Alabang CBD are projected to experience the most significant declines in rental rates, with vacancy rates in both districts anticipated to exceed 30 percent by the end of 2025.

Logistics, manufacturing drive demand

The study, revealed in a press conference on Friday, said the industrial sector saw robust demand in 2024, led by the logistics sector’s need for warehouse facilities to support the growing e-commerce, FMCG, and retail industries. Batangas experienced significant growth in manufacturing, attracting industries such as electronics, fast-moving consumer goods and automotive parts because of the strategic proximity to Batangas port.

In terms of location, Laguna emerged as a leader in leasing activities, accounting for 48 percent of demand due to its advantageous location near the South Luzon Expressway, making it an ideal hub for distribution centers.

Meanwhile, Bulacan’s competitive average rental rate of P191 per square meter attracted locators seeking affordable yet strategic locations.

Residential faced headwinds

On the other hand, the residential condominium market in Metro Manila faced challenges with unsold inventory, particularly in the mid-end market segment. Of 37,800 units, 26,500 remain unsold, with the majority (51 percent) priced between P3 million to P7 million.

Over the next three years, 17,000 unsold units are scheduled for turnover.

However, the number is expected to drop to approximately 5,000 units by the time they are ready for occupancy, as 12,000 units are projected to be sold before turnover.

Despite these challenges, the market is showing signs of adjustment, with residential condominium prices in Metro Manila experiencing a 14.27 percent year-on-year decline in the third quarter of 2024, marking the steepest drop since the second quarter of 2021.

Currently, condominium prices average P217,000 per square meter.

The real estate market in Metro Manila is undergoing dynamic shifts across the office, industrial, and residential sectors.

While challenges such as vacancy rates and unsold inventory persist, the market also presents opportunities for growth and recovery. As we move into 2025, stakeholders can anticipate a landscape that continues to evolve, driven by strategic developments and adaptive market responses.