Philippine Office Developers Urged to Enhance Spaces and Offer Incentives Amid Return to Traditional Workplaces

According to Colliers Philippines, office developers in the country must upgrade their facilities and introduce leasing incentives to keep pace with the increasing shift back to conventional office environments. In its recent Survey Flash Report, the consultancy revealed that 60% of employees are now working onsite, a rise from 54% reported late last year.

Hybrid work arrangements remain prevalent, with 40% of respondents adopting a mix of remote and office work, while only 4% continue to work fully from home.

Colliers emphasized the strategic importance of this period for landlords, stating, "Now is an opportune time for office landlords to aggressively promote their development pipelines, especially in Metro Manila submarkets poised to become landlord's markets within the next 12 to 24 months."

The report also highlighted a trend of office space consolidation among major tenants, opening opportunities in areas like Makati central business district (CBD) and Fort Bonifacio. These locations have large, vacated office spaces that developers can target towards outsourcing companies and large-scale traditional occupiers.

Regarding expansion plans, the Makati CBD remains the preferred area, chosen by 33% of prospective tenants, followed by Fort Bonifacio at 23%. Other favored locations include the Bay Area and Quezon City (each at 12%), Alabang (11%), and the Ortigas CBD (10%).

When deciding on office leases, 56% of respondents identified lower base rents as the most attractive concession. Other sought-after incentives include rent-free periods for fit-outs (17%), fit-out allowances (15%), and no or postponed rent escalation (12%).

In the first half of this year, over half of office transactions in Metro Manila were expansions, driven by outsourcing companies, flexible workspace operators, logistics firms, banks, financial services, and IT companies, primarily in Fort Bonifacio, Makati, and the Ortigas CBDs.

Colliers encouraged tenants to leverage the current market environment to negotiate favorable lease conditions, while advising landlords to continually improve their properties' appeal and maintain attractive concession offers to remain competitive in a tenant-driven market.

The survey included feedback from roughly 200 participants, comprising real estate developers, property equity analysts, brokers, and investors interviewed between July 30 and 31.