First of two parts
Shifts in the preferences of property stakeholders have been evident since the Philippine government lifted pandemic restrictions and property developers tweaked strategies as a response to emerging demand drivers. Developers should strategically position their projects amid the Philippine property’s evolution.
The office segment continues to see companies implementing hybrid work arrangements, effectively benefiting the flexible workspace market. More companies have also been implementing 100% return to office (RTO) and this is a signal that landlords need to be more proactive in offering flexible lease terms. This is particularly true for firms offering expansive office space in the fringes of established business districts.
Residential investors and end-users planning to acquire units in Metro Manila should shop around and look for the most attractive payment terms in both pre-selling and ready for occupancy (RFO) segments. Developers, meanwhile, should continue highlighting their attractive and flexible terms to further buoy appetite in the residential market, which has also seen a more pronounced shift to suburbia (development of projects outside Metro Manila).
Office tenants and landlords reimagining office spaces
A third of our respondents use their office space to collaborate. Other respondents are making their spaces more productive by incorporating smart technologies (e.g. smart desks and meeting rooms) as well as quiet zones and privacy pods. In our view, the role of office space is now transforming with several companies now using their spaces to mount group activities (e.g. townhall meetings) for their employees. Colliers believes that reimagining and rethinking the utilization of office space will be critical moving forward especially as more companies intend to entice a greater fraction of their employees to return to office (RTO). Reimagining workspaces is also important as more companies are planning to implement hybrid work arrangements. This is also aligned with the implementation of CREATE MORE which now directs PEZA-registered companies, including BPO firms, to allow a greater number of employees to work-from-home while a fraction RTO.
As companies encourage their employees to return to the office, landlords have a key role in making RTO more appealing. This can be achieved by organizing tenant engagement events that focus on enhancing the well-being of employees within office spaces.
Outside of the more established business districts (Makati CBD, Ortigas CBD, Fort Bonifacio, and Alabang, Makati Fringe and Ortigas Fringe were the top choices given the availability of high-quality office space with discounted lease rates. In our view, these business hubs remain attractive due to their proximity to transportation terminals and residential communities of employees.
More companies implementing 100% RTO
More than half of our respondents are now implementing 100% return to office (RTO) while about 40% are still implementing hybrid work arrangements.
This only highlights the crucial role a well-designed physical office plays as more companies entice their workers to RTO. As previously highlighted, a reimagined workspace is a must.
Thriving popularity of co-working spaces
Nearly 60% of our respondents said they are willing to occupy flexible workspaces which should support their hybrid work arrangements.
As of the end of 2024, flexible workspace stock in Metro Manila reached 238,000 sq metres (2.6 million sq feet), representing 2% of the capital region’s total office stock. Meanwhile, flexible workspace vacancy reached 17.5% in Q4 2024, lower compared to the record-high vacancy of 41% in Q1 2021. Makati CBD and Quezon City are among the submarkets with the most seats available. Colliers encourages flexible workspace operators to look at office buildings situated near residential communities as potential sites for their expansion.
Thriving in a shifting office market
Despite elevated office vacancy in Metro Manila, Colliers Philippines believes that landlords should remain active in enticing employees to RTO. As we highlighted previously, developers should work with their tenants in mounting employee engagement activities.
Despite headwinds in the market, the results of our poll indicate that there are opportunities amidst all the uncertainties. As a response to persisting headwinds, property firms have been limiting new supply and are scouting for new office tenants in a constantly-evolving Metro Manila office landscape.
