Metro Manila’s office market experienced a remarkable resurgence in 2024, with overall net absorption reaching an impressive 282,600 square meters, a 290% increase from the previous year. This 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.
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%, 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% by the end of 2025.
INDUSTRIAL: Logistics and Manufacturing Drive Demand — KMC Savills
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, FMCG, and automotive parts, thanks to its strategic proximity to the Batangas port.
Laguna emerged as a leader in leasing activities, accounting for 48% of demand due to its advantageous location near the South Luzon Expressway (SLEX), making it an ideal hub for distribution centers. Meanwhile, Bulacan’s competitive average rental rate of PHP 191 per square meter attracted locators seeking affordable yet strategic locations.
RESIDENTIAL: Price Correction May Be Needed to Prevent Unsold Inventory Amid Oversupply — KMC Savills
The residential condominium market in Metro Manila faced challenges with unsold inventory, particularly in the mid-end market segment. Out of 37,800 units, 26,500 remain unsold, with the majority (51%) priced between 3 million to 7 million pesos.
Over the next three years, 17,000 unsold units are scheduled for turnover. However, this 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 prior to turnover. Despite these challenges, the market is showing signs of adjustment, with residential condominium prices in Metro Manila experiencing a 14.27% year-on-year decline in the third quarter of 2024, marking the steepest drop since the second quarter of 2021. Currently, condominium prices average PHP 217,000 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.
