Metro Manila’s office market entered a wait-and-see phase in the first half of 2026 as companies delayed leasing decisions to reassess how artificial intelligence will reshape their workplace needs, although demand continued to favor premium office buildings in prime business districts.
Property consultancy JLL described the market as being on “watch mode,” with occupiers pausing expansion plans not because of weakening demand but to evaluate whether AI will require them to maintain, optimize or reconfigure their office portfolios.
“We describe the first half of this year as a market on watch,” said Janlo Delos Reyes, JLL head of Research and Advisory. “These are mainly deferred decisions. The demand is still there and will likely materialize over the next couple of quarters.”
Metro Manila’s office stock expanded to about 14.6 million square meters after four new projects added roughly 144,000 square meters during the period. Gross leasing transactions reached 436,000 square meters, down 8.7 percent from a year earlier as second-quarter activity slowed from the first quarter.
Delos Reyes said AI is becoming a central consideration for multinational firms reviewing their real estate strategies.
“AI is now part of the decision-making process. Companies are asking whether they should maintain the same space, optimize it, or take on more space,” he said.
Despite the slower leasing pace, occupiers continued to gravitate toward Grade A buildings in Makati and Taguig, extending the market’s “flight to quality” as companies seek premium addresses to strengthen branding and attract talent.
JLL said net absorption remained positive at 162,000 square meters in the first half, with the information technology and business process management sector accounting for 61 percent of second-quarter demand.
A separate JLL survey found 79 percent of Philippine corporate real estate decision-makers expect AI to significantly reshape their property portfolios within five years, yet only 18 percent have begun implementing changes, suggesting that uncertainty is delaying decisions rather than diminishing long-term office demand.
