- Resilient Office Market: Makati CBD and BGC see rising rents (+0.5%) and lower vacancies (10.5%), while fringe markets face oversupply
- Economic Growth: Q2 2025 GDP up 5.5%, inflation at 1.37%, driving demand for logistics, offices, and mixed-use assets
- Emerging Trends: Growth in regional hubs, focus on sustainability, hybrid work, and green-certified properties
Cushman & Wakefield has released its Q2 2025 Philippine Office and Investment MarketBeat report, highlighting growth opportunities and market challenges of the country's evolving commercial real estate landscape. The findings underscore the resilience of prime real estate segments amidst evolving market conditions, with opportunities emerging in high-quality assets and adaptive strategies across sectors.
Prime and Grade A offices in CBDs, including Makati, BGC, and Ortigas, saw stable demand for high-quality spaces. Rental rates increased by 0.5% to PHP 1,118 per sqm per month, and vacancy rates improved to 10.5%. Meanwhile, fringe CBD areas experienced declining office rents (down 1.8%) and rising vacancy rates at 23.4%, reflecting oversupply and muted demand.
Rental yields for office assets remained steady at 6.93%, supported by investor confidence in Grade A developments, which recorded a net positive absorption of 44,000 sqm. However, fringe market challenges persist, requiring innovative landlord strategies to address oversupply and attract tenants.
"The resilience of Metro Manila’s office market, particularly in the established CBDs, underlines the enduring demand for high-quality and strategically located properties. Meanwhile, fringe areas will require more innovative approaches to address persistent challenges,” said Claro Cordero Jr., Director and Head of Research, Consulting & Advisory Services at Cushman & Wakefield.
ECONOMIC GROWTH MIRRORS KEY REAL ESTATE SECTORS’ RESILIENCY
The Philippine economy grew by 5.5% year-over-year in Q2 2025, underpinned by strong performances in services (6.9%) and agriculture (7.0%). Easing inflation, which dropped to 1.37% in Q2 and further to 0.9% in July, supported a 5.5% increase in household consumption. Structural reforms and inclusive policies continue to sustain medium-term growth projections of 6%-8%. This economic progress is reflected in the resilience of the real estate market across sectors.
The residential market thrives as urban professionals and mid-market buyers drive demand for Metro Manila’s vertical developments and suburban hubs in Cavite and Laguna. Retail benefits from stable consumer spending, with malls embracing experiential formats and suburban outlets gaining popularity. Tourism recovery fuels the hospitality sector, with destinations like Panglao and Clark seeing notable hotel developments. The industrial sector remains robust, driven by e-commerce expansion, logistics hubs, and the rising need for cold storage facilities in strategic areas.
According to Claro Cordero,
“The Philippine real estate market continues to reflect the country’s economic momentum, driven by strong consumption patterns, tourism recovery, and advancing logistics demands. Each sector is adapting to the evolving needs of end-users, creating long-term opportunities for developers and investors alike.”
INVESTMENT OPPORTUNITIES
Investor confidence is buoyed by the Bangko Sentral ng Pilipinas' (BSP) 25-basis-point policy rate cut and inflation forecasts of 1.6% for 2025. Logistics facilities, green-certified office spaces, and mixed-use developments continue to attract investors due to their strong income-generating potential.
Regional hubs like Cebu, Clark, and Davao are gaining traction as decentralization creates opportunities for future-ready developments in secondary markets. "Investors are now shifting their focus to secondary markets, which offer more attractive entry points and opportunities for diversification," said Mr. Cordero.
FORWARD-LOOKING TRENDS
The future of the real estate market is being shaped by several key trends. Decentralized growth is becoming more prominent as investment activity spreads into regional hubs, bolstered by improved infrastructure and local economic development. Sustainability is also taking center stage, with businesses increasingly prioritizing green-certified and disaster-resilient buildings to align with long-term environmental goals. Additionally, the hybrid work model continues to influence workplace strategies, as companies focus on wellness-oriented office spaces and flexible lease terms.
Hybrid work models are reshaping workplace strategies, with companies reducing office footprints while prioritizing wellness-focused, flexible spaces. Sustainability remains a priority, with green-certified and disaster-resilient buildings gaining popularity across sectors. The retail and industrial markets also continue to grow, fueled by e-commerce and evolving consumer demand.
"These trends reflect a shift in how businesses view real estate—no longer just as a functional space but as a strategic asset that supports growth, sustainability, and employee well-being," says Claro Cordero.
To optimize future opportunities, businesses and investors are encouraged to focus on adaptable strategies, emphasizing sectoral diversification and sustainable development goals.
Explore Further
For a full perspective on Q2 2025 real estate trends in the Philippines, download the comprehensive MarketBeat report at www.cushmanwakefield.com/ph.
