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Demand for industrial warehousing accelerated in the third quarter of 2026, with manufacturing growth, particularly in the semiconductor sector, helping drive demand in Luzon
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Requirements reached about 292,000 square meters during the quarter, posting a steady growth of 101.79% from the 144,700 sqm in the same quarter last year
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Mandaue City continues to anchor Cebu’s warehouse market while demand for Davao warehouses running ahead of new suppliers
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Forecasted pipeline for 2027 will slow but will pick up again in 2028
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Transportation and storage still account for the biggest demand requirements
Demand for industrial warehousing in the Philippines accelerated in the third quarter of 2026, with manufacturing growth, particularly in semiconductors, helping drive demand in Luzon, according to the latest report by PRIME Philippines.
Industrial warehousing requirements in Luzon reached approximately 292,000 square meters (sqm) in the third quarter, up 101.79% from 144,700 sqm in the same quarter last year, PRIME Philippines assistant vice president for industrial markets Joy Rosario-Bautista said in a recent media briefing.
Transportation and storage remained the main driver, accounting for 47% of total demand in the quarter. Wholesale and retail trade followed at 19%, and manufacturing at 18%.
Rosario-Bautista said growth in electronics manufacturing, particularly semiconductors, is also adding to warehouse demand. She said the Philippines “is quickly becoming the back office of AI (artificial intelligence) chip boom,” with semiconductor manufacturing expansions seen in Pampanga.
She cited Philippine Statistics Authority data showing that the value of production index for manufacturing of electronics, computer and optical products has posted double-digit year-on-year growth since October 2025. The volume of production index for the same products also grew by double digits from October 2025 to June 2026, slowed in July 2026, then returned to double-digit growth in August 2026.
READ: PH manufacturing value, volume grow faster in June 2026
Expansion outside the capital
In wholesale and retail, locators are moving their expansion outside the National Capital Region to higher-growth nodes in Luzon. Low-cost fast-moving consumer goods (FMCG) retailers are decentralizing from Metro Manila to serve growing corridors, and operational facilities are following to support new stores.
Luzon supply was steady at more than 40 million sqm, with an occupancy rate of 97.1% in the third quarter.
READ: PH warehousing steady in Q1 as regional growth gains momentum
New supply to slow in 2027
The forecasted pipeline of new industrial warehouse space in Luzon is 420,000 sqm for 2026. This will drop 72% to just 118,000 sqm in 2027 before rising to 228,000 sqm in 2028.
Most of the 2027 pipeline will be in Bulacan, followed by Cavite and Pampanga. For 2028, 150,000 sqm will be in Batangas and the remaining 78,000 sqm in Pampanga.
Average lease rates in Luzon rose 4.06% year-on-year in the third quarter on rising demand and the rollout of modern developments. In Metro Manila, Rosario-Bautista said booming demand for pickleball courts and other sports facilities has also pushed lease rates higher.
Cebu demand spreads beyond Mandaue
In Cebu, third-quarter demand rose to 22,200 sqm, the highest since the fourth quarter of 2024 and well above the 6,100 sqm recorded in the same quarter last year, PRIME Philippines senior head for Visayas-Mindanao Hannah Yoshida said during the same briefing.
For the first nine months of 2026, Cebu demand totaled 34,200 sqm. Transport and storage made up 79.06% of requirements, followed by construction at 11.71%, utilities at 6.59%, and manufacturing at 2.6%.
Mandaue City continues to anchor Cebu’s warehouse market. But as land becomes scarcer, demand is opening opportunities in other parts of metro Cebu. Yoshida noted that occupiers still target Mandaue, but congestion is pushing some toward Liloan, Consolacion and Talisay.
Cebu warehouse supply stood at about 5 million sqm in the third quarter, with 4.90 million sqm occupied and 162,000 sqm vacant. Vacancy was up from 115,000 sqm a year earlier and 152,000 sqm in the second quarter of 2026.
Yoshida said the higher vacancy was seen in Mandaue, where most locators are looking. Some tenants left due to transfers, while others moved to newer areas for bigger space that better fits current operations.
READ: Prestige Warehousing secures 1.2-ha site at West Cebu Estate
Cebu rents held at P250 per sqm in the third quarter, unchanged from the second quarter. Yoshida said quality space remains limited as developers keep supply in line with demand, and stable rents despite higher vacancy suggest landlords still hold pricing power.
Davao demand outpaces new supply
For Davao, Yoshida said “the theme is relatively simple: demand for Davao warehouses is running ahead of new suppliers.”
“Occupancy is high, the pipeline is thin and requirements this year are strong,” she added.
Davao has about 2.2 million sqm of warehouse supply, 95% of which was occupied as of the third quarter.
Yoshida said Davao’s requirements “show no signs of slowing, and most inquiries come from national players expanding in Davao, led by the fast-moving consumer goods and e-commerce firms supported by third-party logistics providers already operating there.”
READ: FAST Logistics opens Davao crossdock center for large businesses, SMEs
Third-quarter demand in Davao reached 36,700 sqm, the highest quarterly level since the first quarter of 2024. For the first nine months, demand totaled 79,300 sqm, led by transportation and storage at 62.95%, manufacturing at 27.10%, and other service activities at 3.65%.
Davao has 16,608 sqm of new industrial warehouse supply in the pipeline for 2026, but none slated for completion in 2027. Yoshida said this supply gap opens opportunities for more intentional, build-to-suit solutions. Another 40,392 sqm is forecast for 2028.—Roumina Pablo
