Cebu Office Market Achieves Strongest Performance in Five Years with Record Low Vacancy
The commercial real estate landscape in Cebu concluded the year 2025 on an exceptionally robust note, marking a significant milestone as vacancy rates plummeted to their lowest point in half a decade. This remarkable achievement is primarily attributed to vigorous demand from the information technology-business process management (IT-BPM) sector alongside traditional corporate occupiers, according to the comprehensive Year-end 2025 Market Monitor released by CBRE Philippines.
Historic Low Vacancy Rates Across Key Districts
CBRE's detailed analysis reveals that the overall office vacancy rate in Cebu declined sharply to just 11 percent by the fourth quarter of 2025. This downward trend propelled both the IT Park and Business Park submarkets into single-digit vacancy territory for the first time since 2020, solidifying Cebu's position as the nation's tightest office market as we transition into 2026.
Specifically, IT Park vacancy stood at an impressive 6.4 percent, while Business Park recorded 7.3 percent. These figures underscore the sustained confidence and expansion activities of businesses within these prime commercial zones.
Surge in Office Demand and Transaction Volume
Office demand in Cebu reached an impressive 128,500 square meters throughout 2025, representing a substantial increase compared to the previous year. This growth was supported by 84 recorded transactions, with the average transaction size expanding to 1,498 square meters, up from 1,112 square meters in 2024.
The IT-BPM sector emerged as the dominant force, accounting for 76 percent of the total take-up. Traditional firms followed with a 17 percent share, reflecting the continued aggressive expansion of outsourcing and shared services companies seeking operational bases in the region.
Developer Performance and Full Occupancy Achievements
CBRE highlighted that Filinvest Land distinguished itself as the top developer in Cebu during this period. The company successfully achieved full leasing for Filinvest Cebu Cyberzone Towers 3 and 4 while also efficiently backfilling older inventory in Towers 1 and 2.
Three notable buildings reached complete occupancy in 2025:
- Faustina Center
- Central Bloc
- Filinvest Cyberzone Cebu Towers 3 and 4
Market Challenges and Future Supply Dynamics
Despite these positive indicators, CBRE issued a cautionary note regarding potential near-term challenges. The brokerage warned that the market's current tight conditions may face testing as approximately 90,000 square meters of new office supply is anticipated to enter the market during the first quarter of 2026.
This incoming supply includes SM Prime's substantial 60,000-square-meter office development at the North Reclamation Area, which represents one of the largest upcoming completions in Cebu's commercial real estate sector.
"With significant new completions coming online, particularly outside core districts, developers in fringe locations are likely to face pressure and may need to offer more competitive rental packages," CBRE stated in its report.
Vacancy rates in fringe areas remain notably elevated at over 40 percent, while Mactan's vacancy is projected to reach 25.7 percent by the conclusion of 2026.
Rental Rate Projections and Market Outlook
Despite the anticipated influx of new supply, CBRE expects rental rates in prime Cebu locations to maintain an upward trajectory. This projection is based on the likelihood that IT and Business Parks could remain undersupplied relative to sustained demand from corporate tenants.
Current fair market rents in Cebu Business Park and Cebu IT Park range from P550 to P900 per square meter. Market observers note that incentives are gradually tightening as landlords regain pricing power in this increasingly competitive environment.
Cebu's Distinct Market Position and Strategic Importance
CBRE emphasized that Cebu's exceptional performance in 2025 created a stark contrast with other provincial markets across the Philippines, where office demand has generally softened over the past three years. This strong rebound highlights Cebu's growing significance as a strategic expansion hub for global firms seeking high-quality talent outside the congested Metro Manila area.
The sustained growth demonstrates the region's evolving economic landscape and its increasing attractiveness to both domestic and international businesses looking to establish or expand their operational footprints in the Visayas region.
