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Manila's Commercial Space: 2025 Market Trends and Opportunities

2 months ago
11

In 2025, the commercial space market in Metro Manila is navigating a dynamic and complex landscape shaped by various economic and industry shifts. High vacancy rates, driven by the exit of POGOs, corporate downsizing, and the rise of remote work, continue to challenge traditional leasing models. At the same time, tenant preferences are evolving, with greater demand for flexibility, sustainability, and integrated workspaces.


Despite these headwinds, the market presents significant opportunities—particularly in emerging districts and infrastructure-led developments. Strategic investments, adaptive design, and tenant-centric offerings are key to unlocking long-term value in this rapidly transforming real estate environment.


Market Overview: High Vacancies Amidst Recovery Signs


Metro Manila’s office sector continues to grapple with elevated vacancy rates, which stood at 19.8% at the end of 2024 and are expected to rise further in 2025 . This oversupply is attributed to factors such as the exit of Philippine Offshore Gaming Operators (POGOs), corporate downsizing, and the shift towards remote work.

Despite these challenges, early 2025 has shown signs of recovery. Office leasing activity rebounded in the first quarter, with a 66% quarter-on-quarter increase, totaling 237,600 square meters of office deals. This resurgence is largely driven by the IT-BPM sector, which continues to be a significant contributor to office space demand.


Shifting Preferences: Rise of Flexible Workspaces


The demand for flexible office spaces continues to grow, especially in prime business districts like Bonifacio Global City (BGC) and Makati Central Business District. As companies adapt to hybrid work arrangements and prioritize cost-efficiency, flexible workspaces offer the ideal solution with scalable options and minimal long-term commitments.


These spaces provide modern amenities, collaborative environments, and strategic locations, making them attractive to startups, freelancers, and even large enterprises. In BGC, premium flexible offices are in high demand, with rental rates averaging around ₱18,000 per seat monthly. This trend reflects a broader shift toward workplace agility, where adaptability and convenience drive leasing decisions.


Retail Sector: Gradual Recovery


The retail sector in Metro Manila is undergoing a steady recovery, supported by rising consumer confidence and increased spending activity. As foot traffic in commercial centers continues to rebound, retailers are regaining momentum and expanding their presence. This renewed demand is reflected in the sustained take-up of mall spaces, particularly in well-located and accessible areas.

New developments, such as Gateway Mall 2 in Quezon City, are contributing to the revitalization of the retail landscape by offering a fresh mix of shopping, dining, and entertainment options. These projects not only attract consumers but also encourage more retail investments and tenant interest.


Strategic Considerations for Stakeholders


Investors


Investors may find substantial value in acquiring commercial properties located in emerging districts, especially those aligned with upcoming infrastructure projects such as new transport hubs, business centers, and mixed-use developments. These areas typically offer lower entry costs compared to established business districts, presenting an attractive investment opportunity.

As infrastructure progresses, property values in these districts are expected to appreciate significantly over time, providing strong capital growth potential. Additionally, early investments in these zones allow for greater flexibility in development and leasing strategies, enabling investors to adapt to market trends and tenant demands as the area matures and gains commercial prominence.


Developers


Developers should strongly consider incorporating flexible workspace solutions and mixed-use components into their commercial projects to meet the evolving needs of modern tenants. With the rise of hybrid work models and the increasing demand for adaptable office environments, offering coworking spaces, shared amenities, and short-term lease options can attract a broader range of tenants, including startups and remote teams.

Additionally, integrating retail, residential, and recreational elements into developments enhances convenience and promotes a live-work-play environment. This holistic approach not only improves tenant satisfaction and retention but also increases foot traffic, boosts property value, and ensures long-term competitiveness in a shifting market.


Tenants


Tenants can take advantage of the current tenant-leaning market to negotiate more favorable lease terms, particularly in areas experiencing high vacancy rates. With landlords eager to fill vacant spaces, businesses are in a stronger position to request rent discounts, longer rent-free periods, flexible lease durations, or customized fit-out support.


This environment allows companies to secure premium locations at more affordable rates, reduce operational costs, and tailor office spaces to better fit their needs. As competition among property owners intensifies, tenants have greater negotiating power, making it an ideal time for businesses to reassess their space requirements and optimize real estate strategies.


Key Takeaway


Metro Manila’s commercial real estate market in 2025 is marked by high vacancies, a rising demand for flexible workspaces, and a recovering retail sector. While challenges persist due to corporate downsizing and remote work, opportunities are emerging. Strategic investments in growth districts, tenant-driven leasing advantages, and the shift toward adaptable, mixed-use developments present a favorable landscape for investors, developers, and tenants to capitalize on evolving market trends and infrastructure growth.


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