Philippine Office Take-Up Falls 24% in Q2 2026 as Vacancy Holds Near 19%

Philippine office transactions fell to 145,000 square metres in the second quarter of 2026, down 24% quarter on quarter, according to Colliers Philippines. The firm's revised full-year outlook puts vacancy at 19.3% by December against 434,000 square metres of new supply still to land in the second half.

The quarter

First-half take-up reached 336,000 square metres, with vacancy sitting at 19% at the halfway point. Colliers has revised full-year net take-up to 300,000 square metres.

Set those two numbers side by side and the vacancy forecast explains itself. Second-half supply of 434,000 square metres against full-year absorption of 300,000 square metres means roughly 1.4 square metres of new space arriving for every square metre absorbed across the whole year. Vacancy stays near 19% not because demand collapsed but because completions scheduled years ago keep arriving into a market that has stopped growing into them.

Where the weakness actually is

The sharpest move is outside Metro Manila. Provincial transactions fell from 159,000 square metres in the first half of 2025 to 65,000 square metres in the first half of 2026, which Colliers describes as the weakest first-half performance since 2022. That is a decline of roughly 59% year on year, and it is concentrated in exactly the secondary markets that were sold to investors through the last cycle as the growth story.

Within the capital, the leading business districts held up better in the first half:

- Makati: 65,000 square metres

- Fort Bonifacio: 63,000 square metres

- Mandaluyong: 47,000 square metres

Colliers reads the overall slowdown as deferred leasing decisions rather than broad-based contraction, pointing to flexible workspace net take-up doubling year on year to 6,000 seats. Tenants taking flex space instead of signing conventional leases is consistent with that reading, though it also means the demand is being met with shorter commitments and less certainty for landlords.

Why a residential buyer should care

Foreign buyers in the Philippines are mostly buying condominiums within the 40% quota under RA 4726, not offices. The office numbers still matter, for a specific reason: a large share of condominium rental demand in Makati, Fort Bonifacio and Mandaluyong comes from the workforce those offices house.

A 19% office vacancy rate with more supply arriving is not a neutral backdrop for a condo investor underwriting a rental yield. It signals that tenant formation in the districts carrying the highest condo prices is slowing. The provincial collapse carries the sharper warning: if you were sold a unit in a secondary city on the strength of the outsourcing story, a 59% year-on-year fall in office take-up there is the number that tests the assumption.

What to watch

Colliers' 19.3% year-end vacancy projection is the marker to check against. If second-half supply arrives as forecast and take-up holds at the revised 300,000 square metre pace, vacancy stays roughly where it is. If leasing decisions that have been deferred start converting, the figure improves. If provincial demand stays at first-half levels, it does not.

Anyone modelling Philippine condo yields on 2019 assumptions should reset them against the current vacancy trajectory rather than against headline transaction counts, which move around more than the underlying occupancy picture does.

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