News release

Metro Manila real estate weakens in Q3; BPO to drive long-term demand

In its latest thought leadership event, JLL reviewed the industry’s performance in the previous quarter and discussed its outlook for the next months.

November 11, 2020

While Metro Manila’s real estate weakens across the board in Q3 and is expected to continue to face short-term uncertainties and challenges, real estate services and consultancy firm JLL Philippines remains optimistic for the country’s property landscape.

In its latest thought leadership event, JLL reviewed the industry’s performance in the previous quarter and discussed its outlook for the next months, with Janlo de los Reyes, Head of Research and Consultancy, leading the discussion. James Taylor, JLL Corporate Solution’s Asia Pacific Research Head, also shared his insights on how the pandemic has impacted the real estate strategies of Asia Pacific office occupiers. Metro Manila’s office segment faced overall subdued leasing activity due to softening demand, and this was shown by average vacancy rates rising to 9.5% in Q3 from the previous quarter due to occupiers moving out.

“We have seen entry and expansion plans put on hold. There were lease contract pre-terminations especially in the POGO sector, as well as downsizing of offices by BPO firms as they re-evaluate their real estate portfolio,” said de los Reyes.

Similarly, overall pre-commitment rate of office spaces slightly fell to 24.4% at the end of Q3 as potential tenants are holding off leasing plans as they continue to assess space requirements in the next normal.

Nevertheless, JLL sees a bright spot in the BPO sector continuing to drive demand in the long term, despite the exodus of POGO firms in the country.

 “Office demand from POGO firms may still remain despite ongoing tax concerns and reports of exits. We anticipate that operators that will stay are those that are keen to expand their operations in the country and lead to stable office demand moving forward,” explained de los Reyes.

For the residential sector, average rental vacancy rose to 8.2% in the third quarter of the year owing to the weak leasing activity. The City of Manila posted the highest increase as the work-from-home set-up and online schooling have affected lease activity from students and professionals.

In terms of sales, trajectory differs for ready-for-occupancy and pre-selling projects. “Take-up of recently completed projects showed improvement in Q3 due to favorable payment terms and availability,” said de los Reyes. “Pre-selling market, on the other hand, is facing weaker demand as buyers are more cautious of their long-term spending.”

The retail sector also continued to exhibit weak activity in Q3 even with the gradual easing of the community quarantine. Average vacancy rate increased by 6.3% as store closures outpaced store openings in Q3. Around 80% of mall developments originally slated for completion in 2020 slipped to 2021 due to construction schedule challenges posed by the pandemic.

Despite these, JLL remains optimistic and sees bright spots that will continue to facilitate the growth of Metro Manila's real estate landscape.

One of which is the “hub-and-club model”, where occupiers will maintain a head office (club) for socializations such as client meetings and town halls, and expand through satellite offices (hubs), which may be closer to where employees reside. "This decentralization strategy is already taking shape now and may redefine the real estate strategy of occupiers moving forward,” said de los Reyes said.

JLL also anticipates that real estate investment trusts (REITs) will continue to attract investors in the medium- to long-term and will allow the country to further develop capital investments. Likewise, JLL expects the current trends to continue in the long term: digitalization as the norm of real estate players; the rise of smart cities and townships; and the emergence of alternative asset classes such as data centers and logistics.

Watch the webinar recording here and read the Q3 2020 Metro Manila Property Market Overview full report here.

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 over 92,000 as of September 30, 2020. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit