PRIME Philippines’ 2026 Special Property Market Report, titled “BEYOND THE METRO: THE DECENTRALIZATION PLAYBOOK”, focuses on the Industrial and Offices Sectors as well as highlighting the Visayas and Mindanao markets, in response to the evolving backdrop due to the Middle East Conflict.
PRIME PHILIPPINES’ Cholo Florencia, Executive Vice President, Overview; Joy Rosario, Vice President, Industrial Tenant Representation; Mervyn Valenzuela, Vice President, Office Tenant Representation; and Ruth Coyoca, Vice President, Visayas-Mindanao, are the speakers of the media briefing that was held on May 12, 2026 at GreatWork, 32nd Floor, Mega Tower, Ortigas Center, Mandaluyong City.
The Key Macroeconomic Highlights of the Overview of Global Shockwaves, Local Impacts are GDP Driver Slowdown, Inflation Spike and Interest Tightening, Employment Decline, Credit Rating Tempering and Piecemeal Peace.
Year-on-Year GDP Growth continues to decline from 2022 to 2026 Q1. Inflation is accelerating; policy rate increases to follow from 2021 to 2026 Q1. Employment rate reaches annual post-pandemic low from 2024 to 2026 Q1. OFW remittance are expected to decline 7.8% in 2026. Credit Rating Agencies downgraded their outlook for the Philippines .
PEZA surpasses its full-year 2025 investment target. Foreign direct investments decline by 17.1% YOY in 2025. The Philippines’ purchasing power eroded at the quickest pace among the ASEAN-5.
Regardless of the war outcome, the impact is predictable. Will the ceasefire hold? Scenario 1: Peace, Scenario 2: Escalation, and Scenario 3: Uneasy Ceasefire. The General Impact include Economic Slowdown, Accelerated Inflation, Short-Term Storage Demand Spike, Wait-and-See Approach and Shift Toward Renewable Energy.
Wait and See: What Geopolitical Conflict Means for the Industrial Sector
Steady Supply Growth to 2028, Downtick in Occupancy in 2026Q1, Flight to quality for Grade A Facilities, Lease Rates Remain Stable, and Transportation Logistics Dominate Industrial Requirements are the Key Highlights for the Industrial Sector.
Batangas market recovers from dip as other provinces remain stable in relation with the Quarterly Warehouse Occupancy Levels per Major Corridor from 2025Q1 to 2026Q1.
Lease rates experienced minimal changes from 2025Q4 to 2026Q1. Wholesale/Retail demand tapered off following 2025H2 as Laguna continues to top charts for requirements. Industrial warehouse lease rates have yet to follow suit as the CMPI soars due to worldwide tensions.
Supply expansion and evolving lease strategies are expected to define the Philippine Industrial market for 2026.
Recuperation Amid Rising Competitive Pressure
Key Highlights for Metro Manila’s Office Sector include No major shocks in Q1, CBDs marginal softening, Typical Demand Drivers, Decentralization & Cost Shift, and Incoming Supply Pressure.
Occupancy in Metro Manila is expected to progress gradually while new supply enter the market. Each CBD displayed varying occupancy changes QoQ amidst minimal completions. Occupancy mostly held steady in Q1 21026 in Metro Cities (Makati CBD, BGC, Ortigas CBD, Quezon City, Bay Area, Alabang CBD).
Metro Manila CBD’s exhibited a mixed lease rate performance in Q1 2026. BGC/Makati has the Widest Rage with Ceiling Price of PHP 1,800/SQM. Alabang CBD (PHP 500 Spread)has the Tightest Range with Lowest Rate of PHP 350/SQM.
Requirements in Q1 2026 were concentrated in CBD’s attractive to BPO and Gov’t.
Office demand remains expansion-led
Leasing Behavior – Demand is driven by expansion (60) rather than relocations. Hybrid and flexible arrangements were adapted particularly by the government sector, while private firms revert to dedicated setups, treating flexibility as tranasiitonal.
Lease Terms and Preferences – Standard lease terms remain around 3 years to 5 years with some tenants preferring 5-year terms. Rising construction and fit-out costs have pushed tenants toward fitted spaces.
Market Shifts and External Pressures – Decentralization remains additive, with firms expanding beyond core CBDs. BPO growth outside Metro Manila is concentrated in established Tier 1 and Tier 2 cities, as security, infrastructure, and incentive gaps temper Tier 3 confidence. The Fuel Crisis has impacted tenant decision and deal timelines, not negotiated lease rate.
Cautious optimism shapes Metro Manila’s office market outlook for 2026.
Office supply in Metro Manila is expected to grow by approximately 2.2% by the end of 2026. Tenants are increasingly preferring fitted office spaces due to rising construction costs. Occupancy is projected to improve gradually by around 1% driven by continued BPO expansion. BGC and Makati are expected to experience stable to moderate rental growth.
Beyond the Metro: The Decentralization Playbook
What Top Developers See in VISMIN
Competitive wages and significant population growth supports long-term growth prospects. VISMIN has a growth-investment gap. 2025 PH Regional Investment Share, GDP Growth, and Total Population
Different Strokes: The Diverging Trajectories of Cebu’s Key Sectors
High leasing velocity is expected for new office developments as older developments perpetuate majority of 13.2% vacancy. Robust office pipelines are expected to accelerate 2026’s lease rate growth. Continues demand and influx of new warehouse sustain warehousing lease rate growth. The Warehouse Demand by Industry in Cebu (2025) of the 44,000 SQM include Manufacturing (28%), Transportation and Storage (27%), Wholesale and Retail Trade (25%) and Others (20%). At 2% vacancy, Cebu’s cold storage market has never been tighter.
Industrial decentralization is creating hotspots in Cebu.
From Cane to Capital: Why Major Developers are Betting Big on Bacolod
Retail giants are converging on Bacolod, with approximately 100,000 sqm of new mall space expected to enter the market within the next three years.
Solid economic fundamentals have attracted significant developer interest. GDP Growth of Highly Cities in Visayas (2024) The cities: Tacloban City (8.20%), Bacolod City (7.70%), Iloilo City (7.10%), Mandaue City (6.90%) snd Lapu-Lapu City (6.5%). National Average: 5.7% Population by Highly Urbanized City in Visayas (2024) include Cebu City (965K), Bacolod City (625K), Lapu-Lapu City (498K), Iloilo City (474K), Mandaue City (364K) and Tacloban City City (259K).
The 100,000 sqm of new retail space of Robinsons Place Bacolod, Megaworld Upper East Mall and Rockwell Power Plant Mall will be introduce within 3 yrs.
Office occupancy at 74.7% leaves a lot to be absorbed, but newer developments exhibit remarkable absorption underpinned by demand chiefly from the IT-BPM sector. IT-BPM Companies Present in Bacolod City inclide concnetrix, Transcom, pentagon, TQVS, APEXREVA, iqorCXBPO, HitRate, Next Level IT Teleservices, SERV CE FIRST, GlobalStrategic, T, ttec, and PROMINENT OUTSOURCE.
Bacolod’s warehousing quality gap keeps lease rates on the lower end.
Green All-Around: Why Mindanao is Set For Monumental Growth
Anchored by a well-established IT-BPM sector that accounts for roughly 75% of office requirements, Davao is poised to swiftly absorb the approximately 85k sqm of new office space expected to complete within the next four years.
CDO & Davao are the most fiscally productive HUC per capita in Mindanao. New office developments will break a 5-year streak of inactivity.
With a saturated downtown, an emerging uptown is sprouting. Downtown Retail Developments in Cagayan de Oro include SM CITY CDO, Gaisano Mall, Centrio Mall, Limketkai Mall, Robinons and All Home.
85k sqm of grade A office space will be introduced from 2026-2029. Davao is statistically the only landlord’s office market. IT-BPM expansion is the key driver of Davao’s office market. Office Occupants in Davao City (2026Q1) include IT-BPM (25%) and Traditional (75%) for the 284,000 SQM. Further rent segmentation will follow introduction of new developments. Davao posts one of the lowest warehouse nationwide at 2.4% with rent appreciation expected to follow. Temperature-controlled logistics have responded to rising port activity.
VISMIN markets are expected to improve, each at their own pace
CEBU – Robust office pipelines are expected to accelerate office lease rate growth beyond 2.4% and furthers segment premium vs. non-premium markets. Decentralization of newer supply is slated to create new hotspots in the Cebu Fringe, Southern Cebu, and other areas as vacancy is at its tightest.
BACOLOD – The additional 100k sqm of mall space in the next 3 years will intensify pressure against local developments. The completion of Panay-Guimaras-Negros Island Bridges will help alleviate ferry dependency and create a new industrial hotspot in Pulupundan.
DAVAO – New Grade A office completions (2026-209) amounting to 85k sqm will trigger a flight-to-quality cycle attracting new entrants into the market. Further warehouse completions are likely to delayed by rising construction cost (30%+) further prolonging the landlord’s market.
CDO – The Uptown Corridor will emerge as CDO’s primary zone for commercial growth with the influx of various township developments. Port-linked cold storage demand is expected to grow as the Mindanao Container Terminal continuous to be over capacitated and upgraded.
PRIME Philippines moves your business forward by incorporating the most innovative solutions to your ever-changing real estate needs. A real estate consultancy firm ready to provide your business with solutions regardless of the stage you are in.
REFERENCE: PRIME Philippines, PRIME Philippines Research & Advisory Group