MAKATI CITY — Property investors focusing on Metro Manila's prime real estate are seeing promising signals from Makati's central business district: declining vacancy rates, tightly controlled new supply, and increasing rental demand. Colliers Philippines projects that vacancy rates in Makati CBD could drop to as low as 5.5 percent by 2026, down from 7.2 percent a year earlier, a trend that historically supports meaningful capital value appreciation and stronger landlord positioning. With no new office buildings completed in the first quarter of 2026, existing assets are well‑placed to benefit from tightening availability.
Vacancy Compression and Limited Pipeline Strengthen Asset Values
The measured delivery of new office space is a key factor underpinning asset values. Approximately 505,000 square meters of new office supply is expected by the end of 2026, but the majority of that inventory is concentrated in Arca South, the Bay Area, and Quezon City, leaving Makati with only modest additions to its existing stock. This supply constraint, coupled with steady leasing activity from traditional firms, reinforces Makati's status as a prime market for institutional investors and property funds seeking stable, income‑generating assets.
Diverse Tenant Demand Supports Occupancy Levels
According to Colliers data, traditional occupiers, including legal services, engineering and construction firms, government agencies, and flexible workspace operators, accounted for 67 percent of office transactions in the first quarter of 2026, demonstrating broad‑based demand that supports healthy occupancy levels. Information technology and business process management firms, alongside shared services companies, made up the remainder of leasing activity, highlighting the diversified tenant base that underpins Makati's office real estate resilience.
Rental Growth in Premium Assets Enhances Returns
Office rents remained stable across major central business districts, but Makati's Grade A and Premium buildings posted marginal rental upside due to limited high‑quality availability. Colliers expects modest year‑on‑year rental growth in the range of 1 to 5 percent in established business districts with constrained supply, including Makati CBD and Bonifacio Global City. For property owners, this translates into improved net operating income and stronger holding returns.
Proactive Positioning Unlocks Value
Kevin Jara, director of office services‑tenant representation at Colliers Philippines, encourages both landlords and occupiers to act proactively to capitalize on the improving market conditions. "Occupiers and landlords who act now, securing leases early, refurbishing aging assets, and embracing flexible solutions, will be well‑positioned to capture the upside as conditions improve," he noted. For real estate investors, well‑timed capital improvements and lease repositioning present clear opportunities to enhance asset values ahead of the projected market tightening.
