Artificial intelligence is starting to influence where Philippine companies want to work, with many firms delaying real estate decisions even as demand for office space remains positive, according to Jones Lang LaSalle Philippines.

JLL Philippines said nearly four in five Philippine organizations expect AI to significantly affect their real estate portfolios over the next three to five years. Yet only 18 percent have begun actively transforming their portfolios, creating a gap that is contributing to slower office leasing activity.

“There’s a large disconnect,” said Janlo de los Reyes, JLL Philippines head of research and consultancy. “Everyone recognizes it, but only a few have actually mobilized or taken action with regard to their portfolios.”

Metro Manila office leasing reached about 436,000 square meters in the first half, down 18.7 percent from a year earlier. Second-quarter take-up fell 50.4 percent from the previous quarter to 145,000 square meters.

JLL said the decline largely reflected deferred decisions rather than canceled requirements.

“Though there has been a slowdown in terms of activity, these are mainly deferred deals, meaning that these deals are still in place and will probably be locked in over the next couple of quarters,” de los Reyes said. “So these are just deferred, not necessarily terminated.”

Despite slower leasing, net absorption remained positive at about 162,000 square meters for the first half, while vacancy improved to 18.2 percent from 18.5 percent in the first quarter.

Global capability centers and business process outsourcing firms remained the biggest sources of demand, accounting for about 61 percent of first-half take-up, followed by technology at 11 percent and media and entertainment at 6 percent.

JLL said companies are also increasingly shifting to higher-quality buildings while reducing or optimizing their footprints.

The trend extends beyond offices. Three in four Philippine organizations expect their headcount to grow over the next three to five years, while most expect AI to reshape jobs rather than eliminate them.

“For the corporate real estate teams, they expect workforce growth and believe AI will enhance, not replace, human roles,” de los Reyes said. “It’s really more about reskilling our current talent as opposed to reducing it.”

Meanwhile, Metro Manila’s retail sector posted record store openings in the second quarter, with about 64,000 square meters added, while hotel occupancy softened seasonally to 81.1 percent.

JLL expects continued supply pressure in the second half, with about 1.5 million square meters of office space and 430,000 square meters of retail space scheduled to enter the market through 2030.

“This supply pressure will weigh down on rentals and vacancy,” de los Reyes said, warning of elevated vacancy and softer rents as new supply comes online.