Philippine industrial hubs with weak grid capacity risk losing projects: Savills

Property consultancy Savills Philippines warns that industrial hubs with limited grid capacity risk losing projects to locations with more reliable electricity. Power costs and supply stability are becoming decisive factors for manufacturers and logistics operators, outweighing traditional advantage

Industrial hubs with limited grid capacity risk losing projects to locations that can provide more reliable electricity, according to property consultancy Savills Philippines, as power supply becomes a bigger factor in industrial site selection.

“Modern logistics facilities rely on automation, sorting systems and cold storage, so they need stable power as much as factories do,” Miguel Leonardo of Savills Philippines Research said in an e-mailed response to BusinessWorld on Thursday. He said locations where new power generation and transmission capacity comes online on schedule could be better positioned to attract investment, while hubs with limited grid capacity risk losing projects to areas that can guarantee supply.

Savills said power costs are also weighing more heavily on manufacturers choosing where to locate. “Land, connectivity and incentives are now available in several competing provinces, so they no longer set locations apart as clearly. Power increasingly does,” Mr. Leonardo said.

Grid electricity rates in the Philippines rose by 17% to 18% year on year as of mid-2026 and were the highest in Southeast Asia, according to Savills. The consultancy said high rates can squeeze manufacturers’ margins, while unstable supply can interrupt production. “For manufacturers, high rates erode margins and unstable supply can halt production. Locators are now asking how an estate will secure its power before they commit to a site,” Mr. Leonardo said.

Power reliability is particularly important for semiconductor manufacturers, electronics producers, and data center operators because their operations require continuous, high-load electricity, Savills said. It said even brief outages could interrupt production, leading some occupiers to favour industrial estates with dedicated substations, on-site generation, and access to stable baseload sources such as geothermal energy. “For these firms, reliability carries as much weight as price,” Mr. Leonardo said.

Savills also said industrial parks under the Green Energy Option Program (GEOP) have reported power-cost reductions of 30% to 40% for their locators. Large electricity users may also enter into long-term power-supply agreements with renewable energy generators, with lower electricity expenses helping offset higher rents and reduce overall occupancy costs.

The power issue comes as warehouse development slows. Savills expects 152,000 square metres (sq.m.) of warehouse space to be completed in 2026, down from 450,000 sq.m. delivered in 2025. The consultancy attributed the smaller pipeline to higher construction-material costs and broader economic headwinds. South Luzon remains the country’s main industrial corridor, with Cavite, Laguna, and Batangas accounting for 72% of total warehouse supply. Savills’ first-half industrial market report also expects logistics to remain a source of warehouse demand as e-commerce activity expands and fulfilment operations move closer to consumers, which could shift some activity toward regional hubs in the Visayas and Mindanao.