What’s Driving Cold Storage Demand in the Philippines?
Outlook for the Industrial Industry
Manila’s logistics sector continues to show remarkable performance, ranking 3rd across Asia Pacific in year-on-year rental growth, according to Knight Frank’s latest report. While the sector posted an impressive 9.1% rental growth in 2024, it marks a significant adjustment from the 49.3% growth recorded the previous year, reflecting a maturing market.
Knight Frank’s report highlights a notable shift in market dynamics, with conditions transitioning from being landlord-favorable to more neutral conditions. This shift comes as the logistics sector continues to be driven by strong demand for industrial and cold storage facilities, propelled by the rise of e-commerce, pharmaceuticals, and supply chain modernization.
Cold Storage Demand: Hot or Cold?
The demand for cold storage facilities in the Philippines remains high as industries adapt to evolving consumer needs and global supply chain standards. E-commerce has significantly influenced the need for efficient cold storage, with businesses requiring facilities that can handle perishable goods such as food, pharmaceuticals, and high-value medical products.
The continued expansion of pharmaceutical industries, particularly in vaccine distribution and medical supply chains, further reinforces the need for temperature-controlled storage solutions. As businesses modernize logistics operations, cold storage facilities are becoming essential investments for companies looking to maintain efficiency and compliance with industry standards.
Investors Ask: “Buy or Lease?”
Pros of Leasing:
- Flexibility
- Cost-efficiency (less investment)
- No need to spend for repairs as maintenance is typically included in the lease agreement
- Growth potential (especially if business is doing well, thus the need for space expansion or relocation)
Cons of Leasing:
- Lack of stability (probability of the owner not renewing the lease contract, forcing the business to move)
- Landlord can increase the price of the lease before renewal
- Space limitations and the challenge of making it functional for supply chain operations
While buying a cold storage space requires a significant investment, there are notable advantages. Ownership provides businesses the freedom to design, expand, and optimize their storage operations according to their needs.
Pros of Buying:
- Potential for value appreciation of the property and building equity
- Possibility of leasing the space to other businesses
- Freedom to control all aspects of the space (layout, design, expansion possibilities, etc.)
Cons of Buying:
- High investment cost to build the facility
- Responsible for maintenance and repair costs
- Liability for injuries or claims that occur on the property
Whether leasing or buying, one thing is certain: the demand for cold chain services in the Philippines is on the rise, making it a strategic investment for businesses looking to optimize their supply chain operations.
Invest While It’s Hot
The logistics sector in the Philippines is evolving, with cold storage emerging as a critical component in supply chain modernization. As industries grow and consumer preferences shift, securing the right cold storage solution is crucial for operational efficiency and long-term success. Businesses that invest in high-quality facilities now are poised to capitalize on this increasing demand and the potential for strong returns.
We have a selection of industrial spaces available, including cold storage facilities designed for pharmaceuticals, perishable goods, and other specialized needs. Whether you need a short-term lease or a long-term investment, we can help you find the right solution.
Reach out at inquiry@santos.knightfrank.ph or call us at +63 917 806 6315 to explore available opportunities.
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About Santos Knight Frank
The world of real estate can be a difficult place to navigate. Whether property is your investment or a tool that drives your business success, you need a partner who can guide you in every step of the way.
Since 1994, Santos Knight Frank has been guiding Fortune 1000 companies, BPOs, private clients, and institutions in all facets of real estate. We advise companies on their best office, retail, and industrial location, oversee commercial fit-out projects, and manage facilities. We have facilitated over 4 million sqm of office transactions on behalf of clients and managed over 40 million sqm of real estate under our property & facilities management arm.
Our residential brokerage platform and wide collection of bespoke homes allow our private clients to buy, lease, and sell properties within their budget, timeline, and lifestyle.
For landlords and investors, we provide valuations and appraisal, consultancy and research, sales and leasing, and property management services across the Philippines.
Santos Knight Frank is part of the global Knight Frank network of over 384 offices in 51 markets, including the strategically important U.S. partnerships with Cresa (commercial real estate) and Douglas Elliman (residential real estate).
We are locally expert and globally connected, end-to-end and best-in-class – as any great partner in property should be.
Is the office bubble about to burst? Unpacking the oversupply this 2025
Article
The office market in 2025 is at a crossroads. As new supply outpaces demand, questions arise about whether we are witnessing the formation of an office bubble. The rise in hybrid work, shifting tenant preferences, and high vacancy rates are shaping a narrative that developers and occupiers alike cannot ignore.
The situation
This year has seen a significant uptick in office supply across key cities, driven by projects initiated during the post-pandemic recovery. Rental prices are stagnating or even declining, and landlords are offering unprecedented incentives to retain tenants.
In our 2025 Real Estate Outlook Report, YTD completion of around 181,000 sqm office space brings the total Metro Manila supply to 8.6M sqm. Additionally, 260,000 sqm worth of new office projects are scheduled to be completed within the 2nd half of 2024, with another 420,000 sqm more expected until 2029.
The question remains: Is this a temporary adjustment or a sign of deeper market instability?
What is an office bubble?
Before declaring a bubble, it is important to define it clearly.
A real estate bubble occurs when excessive investment and speculative development lead to a significant imbalance between supply and demand.
In the context of office spaces, a bubble forms when there is a rapid increase in construction driven by optimistic growth projections that fail to materialize. Key indicators include high vacancy rates, falling rental yields, and pressure on developers to offload properties at discounted rates.
Historically, bubbles often burst when market corrections occur, leaving investors and developers with significant losses. The office market today exhibits some of these warning signs, but is it enough to declare a bubble?
Why is there an oversupply?
The oversupply in 2025 can be attributed to several factors.
During the post-pandemic recovery, developers anticipated a swift return to pre-2020 office demand levels. Many projects launched during this period are now entering the market, just as occupiers’ needs are evolving.
Additionally, the shift toward hybrid work has drastically reduced the need for traditional office space. Companies are prioritizing smaller, more efficient spaces tailored to collaboration rather than expansive floors for individual desks.
This mismatch between what developers built and what businesses now want is a key driver of today’s oversupply.
Experts weigh in on the ‘office bubble’
Lovelle Taleon, Santos Knight Frank Director for Consultancy, said, “The possibility of a commercial real estate bubble forming in the office market is unlikely. While the POGO exodus has contributed to increased vacancy rates, as highlighted in our 2025 outlook report, the impact is partial and does not indicate the formation of a bubble.”
She adds, “In fact, [office vacancy levels] are gradually improving, albeit at a steady pace. As highlighted in our 2025 outlook report, the Metro Manila office market has shown resilience, with the year-on-year vacancy rate contracting from 21.05% in 2023 to 20.09% in Q4 2024. While vacancy rates remain elevated compared to pre-pandemic levels, this would still be considered a healthy rate in most global markets.”
With the current trajectory, it suggests recovery rather than a cause for alarm.
Conclusion
The office market in 2025 is facing significant headwinds, but it also holds the potential for innovation and transformation. While oversupply is a pressing issue, it’s not yet clear whether it signals the bursting of a bubble or simply a period of adjustment.
Struggling to lease out your commercial property in this competitive market? Our team of experts is here to guide you. With deep market insights, a vast network of potential tenants, and customized marketing strategies, we ensure your property stands out. Reach us at +63 917 806 6315 or email at inquiry@santos.knightfrank.ph to learn more.
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Find media contacts, and get access to news releases and announcements.
About Santos Knight Frank
The world of real estate can be a difficult place to navigate. Whether property is your investment or a tool that drives your business success, you need a partner who can guide you in every step of the way.
Since 1994, Santos Knight Frank has been guiding Fortune 1000 companies, BPOs, private clients, and institutions in all facets of real estate. We advise companies on their best office, retail, and industrial location, oversee commercial fit-out projects, and manage facilities. We have facilitated over 4 million sqm of office transactions on behalf of clients and managed over 40 million sqm of real estate under our property & facilities management arm.
Our residential brokerage platform and wide collection of bespoke homes allow our private clients to buy, lease, and sell properties within their budget, timeline, and lifestyle.
For landlords and investors, we provide valuations and appraisal, consultancy and research, sales and leasing, and property management services across the Philippines.
Santos Knight Frank is part of the global Knight Frank network of over 384 offices in 51 markets, including the strategically important U.S. partnerships with Cresa (commercial real estate) and Douglas Elliman (residential real estate).
We are locally expert and globally connected, end-to-end and best-in-class – as any great partner in property should be.
