The Metro Manila real estate market is poised for a dynamic yet nuanced 2025, shaped by a blend of fresh supply, evolving occupier demands, and post-pandemic recalibrations. According to Jones Lang LaSalle, Inc. (JLL)Philippines’ latest market overview, the office, retail, and hospitality sectors will navigate a landscape of both challenges and strategic openings, offering tenants and investors opportunities to adapt and thrive in a shifting economy.
Corporate occupiers, BPOs anchor office demand amid hybrid work realities
Traditional corporate tenants and business process outsourcing (BPO) firms continue to steer Metro Manila’s office leasing activity, collectively accounting for over 85% of transactions in 2024. Government agencies dominated this segment, securing 63% of traditional deals, including high-profile leases by the National Bureau of Investigation (NBI) and the Department of Foreign Affairs (DFA).
Despite a 27.3% year-on-year surge in leasing volumes to 583,728 sqm, vacancy pressures persist as hybrid work models prompt firms to reassess their footprints. “Elevated vacancy and soft demand continue to favor tenants,” noted Janlo delos Reyes, JLL Philippines Head of Research and Strategic Consulting. With 682,000 sqm of new office supply entering the market in 2025—much of it in sought-after hubs like Bonifacio Global City (BGC)—rentals are projected to dip marginally to P950–960 per sqm monthly, reinforcing a tenant-driven market through 2026.
Retail sector rides holiday momentum, braces for new supply
The 2024 holiday season injected vigor into Metro Manila’s retail sector, with store openings slashing mall vacancies by 60% year-on-year. Local brands led the charge, comprising 63% of new entrants, though they also accounted for 87% of closures as competition intensified.
Prime mall rents rose 2.1% during the holidays but are expected to stabilize as 129,000 sqm of new retail space—including expansions in Quezon City, Mandaluyong, and Makati—comes online by late 2025. “Mall operators are prioritizing creative, immersive common areas to attract visitors,” Delos Reyes emphasized, signaling a shift toward experiential offerings to sustain footfall.
Hotels balance leisure demand and tourist shortfalls
While the Philippines fell short of its 2024 tourist target (5.9 million arrivals vs. 7.7 million goal), hotel occupancy held steady at 472 basis points quarterly, buoyed by holiday gatherings and leisure travel. Average room rates climbed 3.8% to P8,097 nightly, nearing JLL’s year-end forecast but still below pre-pandemic highs of P9,100.
A wave of foreign-branded hotels is set to redefine the market from 2025 onward, with Marriott, Ascott, and Radisson comprising 74% of the 2,587 upcoming rooms. Makati and Pasay will anchor this growth, blending luxury and economy segments to cater to both corporate and leisure travelers.
Strategic opportunities in a mixed market
Despite sector-specific headwinds, JLL underscores Metro Manila’s enduring appeal for BPOs, regional corporations, and hospitality players. “Sustained demand for leisure travel and immersive retail experiences will drive growth,” Delos Reyes affirmed, highlighting interest from Southeast Asian and Australian firms eyeing Philippine expansion.
As Metro Manila’s real estate market adapts to new supply and shifting demands, 2025 presents a pivotal moment for stakeholders to align with emerging trends. For tenants, negotiable leases and premium spaces offer value; retailers must innovate to captivate consumers; and hotels can leverage foreign partnerships to elevate standards. In this landscape of adjustment, agility, and foresight will unlock the brightest opportunities—proving that even in flux, Metro Manila remains a canvas for reinvention.
