Office Space Prices Declining in Manila

December 27, 2024

Starting a business in the Philippines has never been more advantageous, especially with office space prices in Metro Manila experiencing a consistent decline in recent months. As entrepreneurs and investors look for cost-effective solutions to set up their companies, the drop in rental prices presents a unique opportunity to register a business and secure a significantly lower cost of prime office space.

Before the pandemic, office space rentals in Metro Manila were some of the highest in Southeast Asia. Prices were steep, with average rates ranging from PHP 800 to PHP 1,200 per square meter (sqm) in central business districts like Makati, Bonifacio Global City (BGC), and Ortigas. As demand for office space grew, fueled by the increasing number of businesses, the prices soared. The real estate market in Manila was in high demand, with companies vying for the best locations in the city to establish their presence.

However, the onset of the COVID-19 pandemic in early 2020 changed the business landscape dramatically. The government imposed strict lockdowns to curb the spread of the virus, forcing companies to close their offices and switch to remote working arrangements. This sudden shift in business operations left many office buildings with unoccupied spaces. Companies that could manage remotely found little need to continue paying for high-cost office space, and many others struggled to survive in the face of economic uncertainty.

The Impact of the Pandemic on Office Space Demand

The widespread adoption of remote work forced companies across various industries to reconsider their real estate needs. What was once a priority for companies—having a physical office in Metro Manila’s bustling business districts—suddenly became optional. As a result, office demand significantly decreased, leading to a rise in vacancies and a noticeable decline in rental prices.

According to data published in August 2024, Metro Manila’s office vacancy rate had reached an alarming 19.8%. This marked an increase from previous years, as businesses either downsized or eliminated their office space needs. With companies shifting to permanent remote work or reducing their operations, the demand for physical office spaces plummeted, leading landlords to lower rental prices to attract tenants.

In August 2024, the average rental price in Metro Manila for office space stood at around PHP 850 per sqm in prime business districts, a stark contrast to the pre-pandemic rates. Even with the gradual return of some workers to offices, the market remained saturated with available office space, causing rental prices to fall further. Though showing signs of improvement, the real estate market continued to be in recovery mode, with many businesses still opting for remote work arrangements.

The Recovery and Decline in Office Space Prices in Late 2024

Fast forward to December 2024, and the situation has evolved further. Despite the ongoing recovery efforts and the gradual return to office work, office space prices in Metro Manila have declined. The latest reports highlight that rental prices have further dropped in some districts. According to the Philippine Star, office rent in Metro Manila is expected to decrease even further in 2025 as the market remains oversupplied. While the demand for office space has increased somewhat due to economic recovery, it remains insufficient to offset the large inventory of vacant offices.

Recent data from December 2024 indicates that rental rates in prime business districts such as Makati, Ortigas, and BGC are hovering between PHP 700 to PHP 1,000 per sqm, depending on the location and the type of building. This marks a continued decline from earlier periods. Notably, office space in areas once considered premium—like BGC and Makati CBD—has seen some of the steepest drops in rental prices as companies re-evaluate the necessity of premium office locations given the flexibility offered by hybrid work models.

The latest figures also show that the vacancy rate has remained high, with over 20% of office spaces in Metro Manila still unoccupied. The report from BusinessWorld in August 2024 highlights that the supply of office spaces continues to outpace demand, exacerbating the trend of declining rental prices. This oversupply is expected to persist for some time, with many businesses opting to hold off on securing physical office spaces or choosing more affordable options outside the traditional business districts.

Opportunities for New Businesses

For entrepreneurs looking to establish a business in the Philippines, now is an excellent time to take advantage of declining office rental prices. The market offers ample opportunities to secure office space at more affordable rates, particularly in prime locations previously cost-prohibitive for smaller businesses or startups. With rental prices declining monthly, companies can enjoy lower overhead costs, leading to greater profitability in the early stages of business development.

Moreover, companies that were previously hesitant to commit to long-term office leases due to high rental rates now have the opportunity to secure favorable terms and negotiate rent discounts. The decline in office rental prices also allows businesses to upgrade their office space without breaking the bank, allowing for better facilities, more comfortable work environments, and enhanced employee satisfaction.

As highlighted by the reports, the decline in rental prices in Metro Manila is expected to continue, making this a crucial period for new businesses to register and secure office space. The oversupply in the market means that various options are available for companies seeking office locations in the country’s top business districts.

Is Assistance Available?

Yes, assistance is available to businesses looking to set up operations in the Philippines. Triple i Consulting can help you establish a business in the Philippines, and our expert team can assist you in finding and securing the ideal office space. Whether you are looking for a prime location in Makati, BGC, Ortigas, or a more affordable option in emerging business districts, we can guide you through the process and ensure you secure the best office space for your business needs.

Additionally, our team can help fit out your office space, ensuring that it meets your operational requirements while staying within your budget. From negotiating leases to coordinating office setup, Triple i Consulting offers comprehensive support to help you establish your business in the Philippines smoothly and efficiently.

Contact us today to schedule an initial consultation with one of our experts and take the first step toward launching your business in the Philippines with the right office space.