Cebu’s dynamic office market takes center stage

Colliers believes that Cebu will continue to play a pivotal role for business process outsourcing (BPO) firms planning to expand outside the capital region. The city boasts of a skilled talent pool, quality infrastructure, high quality office buildings, and topnotch residential enclaves that can house expatriates.

Metro Cebu is an example of a locality that fosters a live-work-play-shop environment that helps entice major BPO companies to open shop within the locality. Major developers continue to build integrated communities in Cebu, further raising the quality of lifestyle for affluent employees and discerning foreign workers.

Cashing in on Cebu’s competitiveness

Colliers believes that Cebu City will continue to be a preferred residential hub in Visayas due to its competitiveness.

Latest data from the Department of Trade and Industry’s (DTI) 2024 Cities and Municipalities Competitiveness Index (CMCI) showed that Cebu ranked 13th out of 33 highly urbanized cities. It also ranked 10th in economic dynamism and innovation, and 13th in infrastructure.

Talent availability remains to be a key consideration of outsourcing firms when they locate outside Metro Manila.

According to the Commission on Higher Education (CHED), Cebu produces some 21,000 graduates annually, with more than a third having Business, Mathematics and Engineering degrees. These graduates will continue to contribute to further dynamism of the Cebu office market.

Opportunities abound

Colliers Philippines’ director and head of Tenant Representation Kevin Jara previously highlighted that now is an opportune moment for occupiers to consider upcoming developments in their site selection process.

For tenants with long-term real estate plans, the current tenant-leaning market presents a valuable window to secure future ready spaces on highly favorable terms. Having the first mover advantage not only ensures access to better locations and configurations, but also enables occupiers to influence the design and functionality of their future workspace–an advantage for companies with specific operational or branding needs.

This is particularly true for certain business locations where vacancy remains low and/or manageable despite elevated vacancies in other sub-locations.

Colliers believes that “for developers, capturing early commitments will depend on their ability to adapt to evolving tenant expectations. While new supplies continue to enter the market, some developments struggle with occupancy due to rigid lease terms and lack of flexibility.”

Compelling incentives, proposition

To stay competitive, Colliers encourages landlords to offer compelling incentives, such as competitive base rents and flexible lease structures, alongside a clear value proposition.

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Emphasizing green features, integrated technology, and hybrid-ready amenities will be key in differentiating their properties and securing anchor tenants ahead of completion. Offering green, sustainable, and healthy office spaces will definitely be crucial in stoking office demand in Cebu beyond 2025.

Cebu tenants, just like other occupants in key cities outside Metro Manila, should conduct comprehensive due diligence, seek flexible lease structures, and align decisions with long-term business goals.

This is important for the Cebu office market given the still manageable level of vacancy and new office supply due to be completed over the next 36 months.

Colliers encourages Cebu tenants to take advantage of the current market conditions as it is an opportune time to secure good deals.