CEBU remains the country’s largest office market outside Metro Manila, even after Iloilo overtook it in office leasing transactions during the first quarter of 2026, according to Colliers Philippines. The stronger performance in Iloilo was primarily driven by the availability of newly completed Grade A office space, rather than a fundamental shift in market competitiveness.
Speaking at the “Property Talk: Visayas on the Rise—Property Sustains Upside” forum held on July 1, 2026, at Sheraton Cebu Mactan Resort, Joey Bondoc, director and head of research at Colliers Philippines, said Cebu continues to boast the country’s biggest office inventory outside Metro Manila. This is supported by its skilled workforce, mature business process management (BPM) industry, and an expanding pipeline of property developments.
Iloilo Leads Q1 Office Transactions
Colliers data showed that office transactions outside Metro Manila reached 37,000 square meters in the first quarter of 2026, a 32 percent decline from 55,000 square meters a year earlier. Iloilo accounted for 16,000 square meters, nearly half of all provincial office transactions during the quarter, overtaking Cebu’s 9,000 square meters, which dropped from 20,000 square meters in the same period last year. Pampanga recorded 8,000 square meters of transactions, while Laguna posted 1,000 square meters.
“It appears that Iloilo is overtaking Cebu when it comes to office transactions, but that is primarily supply-driven,” Bondoc said. “Compared to Cebu, Iloilo has bigger available office space that is of high-quality, Grade A standard — the type of office space that outsourcing companies require.”
Cebu’s Largest Office Footprint
Despite Iloilo’s strong showing, Bondoc emphasized that Cebu still has the country’s largest office footprint outside Metro Manila, with approximately 1.54 million square meters of office stock. The province typically records around 100,000 square meters of office transactions annually. “Cebu still has the biggest office footprint outside Metro Manila,” he said.
Bondoc noted that Cebu and Iloilo will continue competing aggressively for outsourcing investments throughout the year. “Let’s see, for the remainder of the year, how Iloilo and Cebu perform. In the Visayas and Mindanao, these are two business hubs that really compete against each other when it comes to attracting the major BPM tenants,” he said.
Office Vacancy and Quality Supply
While Cebu’s overall office vacancy rate stood at 16 percent in the first quarter, vacancies were significantly lower in prime business districts: 12 percent in Cebu Business Park and 13 percent in Cebu IT Park. Bondoc said elevated vacancies are concentrated mainly in secondary office locations, while premier business districts continue to attract tenants. He stressed the need to increase the supply of quality office developments to sustain Cebu’s position.
Colliers expects about 208,000 square meters of new office space to be completed in Metro Cebu between 2026 and 2029 through projects by developers including Ayala Land and Rockwell Land. This will provide more options for expanding BPM firms, English-as-a-Second-Language schools, and government agencies.
BPM Industry Drives Demand
The outsourcing industry remained the biggest source of office demand, accounting for nearly half of provincial office transactions. Government agencies, telecommunications firms, energy companies, and manufacturers also contributed to leasing activity. Bondoc dismissed concerns that rapid adoption of artificial intelligence would significantly weaken office demand, noting that Cebu’s market is increasingly driven by higher-value outsourcing companies providing financial, legal, accounting, software engineering, research, and AI-enabled services.
“These higher-value outsourcing companies will continue to expand and occupy office spaces because these are the types of services that are shielded from the impacts of AI proliferation. They use AI to complement their services, not replace them,” Bondoc said. Among the major occupiers in Cebu are Assurion, Wells Fargo, and NPY, while companies such as Concentrix and Ernst & Young continue expanding in the Philippines.
Workplace Redesign and Long-Term Leases
Many BPM firms are redesigning workplaces with collaborative areas, recreation facilities, and wellness amenities to encourage employees to return to onsite work while continuing to sign long-term leases of at least five years. Across major provincial office markets, vacancy rates ranged from 16 percent to 34 percent. Davao remained the exception with only a 3-percent vacancy rate, reflecting limited office supply despite healthy tenant demand. Iloilo posted a 32-percent vacancy rate following a wave of office completions, while Bacolod registered 34 percent and Cagayan de Oro 22 percent.
Despite growing competition from emerging regional cities, Bondoc said Cebu’s combination of skilled talent, a mature BPM ecosystem, and continued infrastructure and property investments should allow it to remain one of the country’s most competitive office markets outside Metro Manila.
