Demand for industrial space expected to surge

MANILA, Philippines — Demand for industrial space may surge further over the next decade, with logistics and data centers to drive the growth, according to real estate consultancy firm PRIME Philippines.

“Industrial sector in the property market has become a sleeping giant who is about to be awakened,” PRIME Philippines founder and CEO Jet Yu said.

“Over the last years, I’ve talked about the industrial sector being a sleeping giant of the Philippine economy. And I think it’s about to be awakened this year,” he said.

PRIME Philippines said that logistics and manufacturing remain the lifeblood of industrial demand, with spaces between 1,000 and 500 square meters in high demand.

It said that Luzon’s industrial’s occupancy rate stands at 97 percent, with Grade C warehouses accounting for most vacancies.

“In 2024, we have reported once again for three years in a row above 90 percent occupancy rate. In 2024, we ended at 97 percent occupancy rate,” Yu said.

“At the longer term, by 2035, 10 years from now, we’re seeing that there will be a need of  additional 50 million square meters of industrial spaces,” he said.

Yu said that these 50 million square meters of industrial spaces would entail about P1.5 trillion in development cost.

“What we’re experiencing right now is just the beginning. Most of the movements the past three to four years in the industrial sector are coming from the logistics sector. Why? Because since the pandemic, there has been a fasttrack  of decentralization across the Philippines,” Yu said.

“These next 10 years, we’re seeing a big demand coming now from the third major driver for the industrial sector, which is the data centers. There is a need for more data centers,” he said.

PRIME Philippines said that while the Philippines is late to the data center race, it is charging ahead with over 100 data centers set to go live within three years.

It said the food processing, logistics and storage industries, however, are also primed for massive expansion.

“As the Philippines steps into 2025, all signs point to sustained growth. With a thriving industrial sector, surging foreign investments, stabilizing domestic consumption and an evolving real estate market, the Philippines is cementing its position as one of Asia’s most dynamic economies,” PRIME Philippines said.