News release

Logistics remains a bright spot in still sluggish 2021 property market

Office and residential vacancies continue to climb

April 30, 2021

The logistics sector continues to be resilient despite the slow recovery of the rest of the real estate market, according to JLL Philippines. The firm anticipates subdued property market activity in the remainder of 2021, with the vaccine rollout heavily impacting most real estate decisions across all sectors.

In its quarterly market overview event, JLL Philippines shared that the office, residential, retail and hospitality sectors in Metro Manila, as well as the logistics sector in the Greater Manila Area, are lagging in terms of both demand and supply, causing rents to dip.

Office and residential vacancies continue to climb

No new office space supply was observed in 1Q2021. Despite the lack of new supply, overall vacancy breached double-digit territory at 14.7% (approx.1.4 million square meters) due to continuous move outs, pre-terminations, downsizing, and softening of demand.

“1Q2021 saw sustained move outs and downsizing from Philippine offshore gaming operators (POGOs) and outsourcing and offshoring (O&O) firms, as well as occupiers who are continuing to focus on cost optimization and putting their re-entry and expansion decisions on hold due to the pandemic,” said Janlo de los Reyes, JLL Philippines’ Head of Research and Consultancy. “Office space lease demand was mainly driven by short-term renewals from O&Os and traditional occupiers to give them flexibility to adapt to the ever-changing environment.”

He added that rentals have dropped by 0.8% q-o-q or 3.0% y-o-y as landlords that have higher vacancy in their developments lowered asking rents to attract new clients. Headline rents in select buildings that may have prolonged elevated vacancy due to soft leasing market may further lower rents.

The residential condominium also registered higher vacancy, which increased to 7.3% from 7.0% in 4Q2020.

“The luxury segment, which is highly reliant on corporate housing and expatriate demand, experienced the highest vacancy across segments” said de los Reyes. “This can be observed in the higher vacancy of residential condominiums located within business districts as they face weak leasing activity from corporates and professionals.”

Retail and hospitality highly reliant on vaccine rollout

“Depending on the speed of vaccine rollout, the retail and hospitality sectors may continue to lag behind in the next quarters. Higher inoculation rate would positively impact the demand for these sectors,” said de los Reyes.

The retail sector did not record new supply in 1Q2021, with the last completion recorded in 4Q2019. Despite this, shopping mall vacancy in Metro Manila surged to 6.6% as store closures still outpaced store openings done prior to the re-implementation of enhanced community quarantine in March.

Similarly, there was no new supply in the hospitality sector and occupancy levels remained low at 20.9% in 1Q2021 (from 22.0% in 4Q2020) due to limited travel.

“The sector is mainly buoyed by repatriated overseas Filipinos. We anticipate hospitality demand to remain subdued until end of the year,” said de los Reyes.

Logistics still a bright spot; demand to spill over to office sector

“As we have forecasted in our report, ‘The Evolution of Philippine Logistics: A Case for Better Quality Logistics’, the logistics sector still sees growth even until next year as we see more developers and operators moving into this market,” said de los Reyes.

The sector saw around 45,800 square meters completed in 1Q2021 in Cavite and Laguna, pushing the total supply to 1.6 million square meters. More supply is expected in the coming years as more developers and operators are looking at this particular asset class for growth.

De los Reyes also explained that the sector is driving demand not only in the industrial sector but also in the office sector. As more e-commerce and retail players come in and take up logistics space, they also require office space to support their business and operations.

Overall, JLL Philippines anticipates subdued market activity in the next quarters and uneven recovery in demand.

“Occupiers and investors are hesitant to pull the trigger regarding their return to office or expansion activities due to the highly fluid environment. Employee safety and wellness, as well as cost optimization, remain their top priorities. Key to all these concerns is the vaccine rollout which will impact a lot of corporate decisions across all sectors,” concluded de los Reyes.

JLL 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 1,400 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 $16.6 billion in 2020, operations in over 80 countries and a global workforce of more than 91,000 as of March 31, 2021. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit