Bay Area office vacancies near 40% amid market slowdown

NEARLY 40% of office space in the Bay Area remained vacant in the first quarter, reflecting continued weakness in one of Metro Manila’s largest office districts following the exit of Philippine Offshore Gaming Operators (POGOs), according to Savills Philippines.

Office vacancy in the district rose to 39.3% in the first quarter from 33.7% in the previous quarter, while net absorption fell to -58,400 square meters (sq.m.), reversing the previous quarter’s positive take-up performance, Savills said in its first-quarter office market report.

“Following a strong net take-up in the Bay Area last quarter, the district experienced a sharp reversal, with net absorption plummeting to -58,400 sq.m. for the current period,” the property consultancy said.

Savills said the district’s previous growth may have been temporary rather than a sustained recovery, as it was likely driven by major lease expirations and a sudden influx of secondary space returning to the market.

“This elevated figure places the Bay Area in a precarious position, as nearly 40% of the total inventory remains unoccupied, signaling a deep-seated supply-demand imbalance,” the firm said.

Despite rising vacancies, average asking rent in the district increased slightly to P700 per sq.m. per month from P698.8 in the previous quarter.

“The Bay Area’s newest delivery remains fully vacant, despite the district having seen no new office supply for the previous 11 quarters,” Savills said.

The district recorded a total of 419,600 sq.m. of vacant office space in the fourth quarter of 2025, while full-year net absorption stood at -112,300 sq.m.

Savills said the absence of POGOs has left the district dependent on a more diversified tenant mix to support recovery.

“Such a high vacancy threshold often triggers a ‘tenant’s market,’ where landlords may be forced to offer more aggressive concessions or lower asking rents to retain existing occupants and attract new ones,” the consultancy said.

The Bay Area’s office stock stood at 1.26 million sq.m., up from 1.24 million sq.m. a year earlier.

Savills expects an additional 180,000 sq.m. of office supply to enter the market between 2026 and 2030, lower than its earlier forecast of 204,000 sq.m. — Juliana Chloe A. Gonzales