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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 accelerated in the third quarter of 2026, with manufacturing growth, particularly in the semiconductor sector, helping drive demand in Luzon, according to the latest report by PRIME Philippines.
For the Luzon market, PRIME Philippines saw industrial warehousing requirements reached approximately 292,000 square meters (sqm) in the third quarter of the year, posting a steady growth of 101.79% from 144,7000 sqm in the same quarter last year, PRIME Philippines assistant vice president for industrial markets Joy Rosario-Bautista said in a recent media briefing.
Demand was still driven mainly by transportation and storage, which accounted for 47% of the total in the third quarter, followed by wholesale and retail trade at 19%, and manufacturing at 18%.
Notably, Rosario-Bautista said the growth in the electronics manufacturing sector, particularly in semiconductors, is also adding to the demand for industrial warehousing.
Rosario-Bautista said the Philippines “is quickly becoming the back office of AI (artificial intelligence) chip boom”, with semiconductor manufacturing expansions seen in Pampanga.
She cited data from the Philippine Statistics Authority showing that year-on-year growth of the value of production index for manufacturing of electronics, computer and optical products have been experiencing double-digit growth since October 2025. The volume of production index for the manufacturing of electronics, computer and optical products have also recorded double-digit growth since October 2025 until June 2026, slowed in July 2026, and then back to a double-digit increase in August 2026.
READ: PH manufacturing value, volume grow faster in June 2026
Expansion outside the capital
On the wholesale and retail front, locators are moving their expansion outside the National Capital Region and to higher growth nodes in Luzon. Low-cost fast-moving consumer goods retailers are decentralizing from Metro Manila to cater to growing corridors, as operational facilities follow suit to accommodate new stores.
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
For this year, the forecasted pipeline of additional industrial warehousing space is at 420,000 sqm, but will dip by 72% to just 118,000 sqm in 2027, before rising up again to 228,000 sqm in 2028.
For the 2027 forecasted pipeline, a big portion will be in Bulacan, followed by Cavite and Pampanga. For 2028, 150,000 sqm of the total is located in Batangas, while the rest is in Pampanga.
Average lease rates in Luzon appreciated by 4.06% year-on-year in the third quarter due to rising demand and rollout of modern developments. Particularly in Metro Manila, Rosario-Bautista said the booming demand for pickleball courts, as well as other sports-related facilities, have driven lease rates higher.
Spreading across metro Cebu
For Cebu, demand picked up in the third quarter to 22,200 sqm, the highest since the fourth quarter of 2024 and higher than the 6,100 sqm demand in the third quarter of last year, according to a presentation during the same briefing by PRIME Philippines senior head for Visayas-Mindanao Hannah Yoshida.
For the first nine months of the year, demand was only at 34,200 sqm, of which transport and storage accounted for the majority of the requirements at 79.06%, followed by construction at 11.71%, utilities at 6.59%, and manufacturing at 2.6%.
Mandaue continues to anchor Cebu’s warehouse market but as land increasingly becomes more scarce, growing demand is creating opportunities for new locations across metro Cebu.
Moreover, Yoshida noted that occupiers target Mandaue, but congestion is pushing some toward Liloan, Consolation, and Talisay.
Warehouse supply in the third quarter was at about 5 million sqm, with 4.90 million sqm occupied while 162,000 was vacant, higher than the 115,000 sqm vacancy in the third quarter of last year and the 152,000 sqm vacancy in the second quarter of 2026.
Yoshida said the increase in vacancy has been observed in Mandaue City where most of the locators are actually looking, and as some have vacated due to transfers and some have opted to locate in newer areas for bigger scale and be more aligned to current operational needs.
READ: Prestige Warehousing secures 1.2-ha site at West Cebu Estate
Rents held at P250 per sqm in the third quarter, unchanged from the second quarter.
Moreover, Yoshida said quality space remains constrained with developers keeping supply aligned with demand. At the same time, stable rents despite higher vacancy suggest that landlords continue to hold pricing power, she added.
Strong demand in Davao
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 holds about 2.2 million sqm of supply, 95% of which are 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
Demand in Davao for the third quarter was at 36,700 sqm, the highest quarterly demand since the first quarter of 2024. For the first nine months of the year, demand was at 79,300 sqm, again led by transportation and storage at 62.95%. It was followed by manufacturing at 27.10%, and other service activities at 3.65%.
For this year, an additional 16,608 sqm of industrial warehouse supply is in the pipeline. There is, however, no slated supply for completion in 2027.
This supply gap also creates an opportunity for more intentional, build-to-suit solutions, Yoshida noted.
For 2028 though, there is a forecasted 40,392 sqm in the pipeline.—Roumina Pablo
