Cebu office occupancy drops to 81.1% as Davao holds at 93.2% ahead of supply wave: PRIME Philippines

Cebu’s office occupancy fell to 81.1% in Q3 2026 as new supply hit the market, while Davao maintained 93.2% occupancy amid tight supply. PRIME Philippines reports that Davao faces a potential 145,000 sq.m. of new office space from 2027 to 2029, more than doubling its inventory.

Cebu and Davao are facing diverging office market conditions as new developments near completion, according to property consultancy PRIME Philippines. Cebu’s office occupancy fell to 81.1% in the third quarter of 2026 from 84% in the first quarter, while Davao maintained a higher occupancy rate of 93.2%.

Cebu recorded negative net office take-up of 29,400 square metres in the third quarter, alongside the completion of 25,100 sq.m. of new office space. PRIME attributed the adjustment partly to tenants consolidating operations and relocating to newer buildings. Average monthly office rents in Cebu rose 3.1% from the first quarter to P665 per sq.m.

Approximately 117,000 sq.m. of office space remains scheduled for completion in Cebu in 2026, with another 130,000 sq.m. planned for 2027. Major projects include the 77,870-sq.m. Northwing Towers 1 and 2, the 13,825-sq.m. Astra Corporate Center, and the 19,000-sq.m. Grand Tower Cebu. Developers in the pipeline include SM Prime Holdings, Cebu Landmasters, and Grand Land.

In contrast, Davao recorded no new Grade A office completions in 2026. However, developers are expected to complete approximately 145,000 sq.m. of new office space between 2027 and 2029, which would increase the city’s total office inventory by about 46% to 462,000 sq.m. Developers in the pipeline include SM Prime, Robinsons Land Corp., Megaworld Corp., DSG Sons Group, and Damosa Land.

PRIME said Davao’s office requirements from January to September 2026 reached approximately 19,000 sq.m., up 73% from 11,000 sq.m. a year earlier. Traditional corporate occupiers accounted for 63% of requirements, followed by business process outsourcing firms at 20% and government agencies at 17%. Average monthly office rents in Davao declined 4.7% from the first quarter to P610 per sq.m.

PRIME Philippines Senior Head for Visayas and Mindanao Markets Hannah Yoshida said the scale of Davao’s planned expansion will test the market’s absorption capacity. She noted that absorbing the projected 145,000 sq.m. would require annual net take-up of approximately 48,000 sq.m. over three years. She also identified Iloilo, Bacolod, Cagayan de Oro, Dumaguete, and Bohol as secondary markets gaining attention from occupiers and investors.