News release

JLL: Cebu office property exhibits resilience in 3Q20

Amidst slips in office space demand and supply, Metro Cebu’s office sector exhibits resiliency in Q3, with O&O firms dominating the leasing transactions.

September 24, 2020

Amidst slips in office space demand and supply, as well as an increase of vacancies, Metro Cebu’s office sector exhibits resiliency in Q3, with offshoring and outsourcing (O&O) firms dominating the metro’s leasing market transactions.

In its latest thought leadership event, real estate services and consultancy firm JLL Philippines put the spotlight on Metro Cebu’s real estate market overview with particular focus on its office sector.

Leading the discussion were JLL Philippines’ Head of Research and Consultancy Janlo de los Reyes and Director of Commercial Leasing Antonio Sabarre, as well as United Health Group’s Research and Development (formerly Savvysherpa Asia) General Manager Zaide Zafra.

Slip in demand and supply but spike in interest for Metro Cebu

Currently, Cebu City hosts majority of office space supply in the metro at 84.7%, followed by Mandaue City (8%) and Lapu-Lapu City (7.3%). This is mainly due to the presence of the Cebu IT Park and Cebu Business Park, which capture around 90% of the entire office market in the metro.

Given the pandemic, only two new developments were completed in Q3, pushing year-to-date office supply in Metro Cebu to 76,000 square meters. Further, in Lapu-Lapu City, there are no identified upcoming projects in the next three years.

Also as an impact of the pandemic to the real estate landscape, average vacancy rate in Metro Cebu jumped by 18.6% in Q3. De los Reyes attributes the rise of office vacancy to pre-termination of contracts by POGOs, especially in Lapu-Lapu and Mandaue areas where vacancies increased substantially in Q3 by 47% and 26.7%, respectively. He also notes that there is no substantial change in pre-commitment rates as investors keep a “wait-and-see” stance.

Average rents likewise slipped by around 1.3% in Q3 due to the continued softening demand, with Mandaue City logging the biggest slip at -2.4%.

In terms of demand, O&O firms which dominate Metro Cebu's leasing market transactions sharply declined in Q3.

Despite these, there is a notable spike in interest for Metro Cebu, from a share of only 4.0% in terms of total inquiries from the previous quarters to 28.6% in Q3. The office space inquiries come from a mix of occupiers from Manila and local-based businesses—95.2% of which are by O&O firms while 4.8% are by traditional occupiers.

Gradual recovery for the office market

“We have observed a lag in terms of the impact of the pandemic on the office sector overall, and this is seen in the relative resiliency of office rentals in the previous quarters despite the overall slowdown in the market,” said de los Reyes, explaining the overall resiliency of the office market.

He also says there might be an L-shaped recovery for Metro Cebu’s office sector that would gradually take shape in 2021, depending on the developments in the next quarter.

“More organizations are starting to settle in the next normal and are strengthening their financial and operational positions. The sooner organizations have adjusted to the next normal, the sooner the recovery is for the office sector,” he said.

Pivoting strategies; decentralization from central district

“We anticipate the emergence of the ‘hub-and-club model’ wherein occupiers will maintain a head office (club) where socializations such as client meetings and town halls will be held. They will also expand through satellite offices (hubs), which may be closer to where their employees reside,” said de los Reyes.

"This is taking shape now and may redefine the real estate strategy of occupiers moving forward,” he said.

Sabarre demonstrated that while most options are currently concentrated at the Cebu IT Park and Cebu Business Park, office spaces are available at the perimeters outside the central district.

“Setting up offices outside the central district and closer to where the employees reside may help address the employees' desire to have the flexibility in terms of working from home or the office,” said Sabarre.

He further said that the completion of upcoming infrastructure projects will help expand developments outside the central district and create positive impact to both the office and logistics sectors in Metro Cebu.

Among these infrastructure projects are the Metro Cebu Expressway, the Cebu-Cordova Link Expressway, expansion of the Mactan Cebu International Airport, and the New Cebu International Container Port in Consolacion area. All of these will not only improve accessibility among the neighboring cities and municipalities, but it will also allow for further growth of other asset classes such as tourism and logistics.

“With all these developments, we remain positive that Metro Cebu will continue to be a hotspot for organizations looking to expand their operations outside Metro Manila,” said de los Reyes. “The pandemic may continue to weigh heavily on the office market and the Cebu real estate market overall, particularly in the short term, but as early as now, we are seeing positive developments that will help the market over the medium and long term.”

JLL Philippines regularly holds knowledge-sharing events and publishes thought leadership pieces on the latest trends and insights in the real estate market. To know more, follow JLL’s social media pages on Facebook and LinkedIn.

JLL has been operating in the Philippines since 1997 as a 100% wholly-owned entity and currently manages about 5.3 million square meters of real estate with a workforce of over 1,300 employees. With more than two decades of local expertise working hand-in-hand with its global legacy, JLL provides to the Philippine real estate market an unparalleled synergy of services with a strong commitment to achieve real estate ambitions through future-ready approaches. For further information, visit

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $18.0 billion in 2019, operations in over 80 countries and a global workforce of nearly 93,000 as of June 30, 2020. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit