The Hidden Costs of a Traditional Office Lease in Metro Manila

The rent quoted on a Metro Manila office listing is rarely the amount your finance team will pay each month. Building dues, centralized aircon, 12% VAT, a large deposit, and fit-out costs all sit on top. This guide walks through each one using a Grade A office in Makati as the example, so you can build a realistic budget before you sign.

Why the headline rent misleads

Metro Manila is two markets right now. According to Colliers Philippines, as reported by InsiderPH, vacancy in BGC is about 8.3% and Makati CBD is trending toward 5.5%. Alabang is around 31.6%. Where space is tight, landlords have little reason to bend on terms. Where space is plentiful, you have more room to negotiate.

For Makati, Zero-Ten Park Philippines' occupancy cost guide lists base rent of PHP 1,000 to PHP 1,700 per sqm per month for Grade A and PHP 800 to PHP 1,050 for Grade B. That is the starting point, not the total.

CUSA and CAM dues

CUSA (common use service area charges) and CAM (common area maintenance) pay for what the building shares: security, lobby cleaning, elevators, engineering, property management, and generator fuel. They are billed per sqm on top of base rent. In Grade A and prime towers in Makati and BGC, the same guide puts them at PHP 200 to PHP 252 per sqm per month.

Centralized aircon

Many towers bill cooling separately from rent and CUSA. For standard hours (8:00 a.m. to 6:00 p.m., Monday to Friday), the guide gives PHP 200 to PHP 262.50 per sqm per month. If your team works night shifts, as many BPO and GCC teams do, expect extra hourly charges or the cost of installing your own VRF units. Ask the landlord for the after-hours rate before you assume your schedule fits.

12% VAT on everything

VAT applies to the whole landlord bill, not just the rent. Here is the example, using the top of each range above.

The total is about 63% above the base rent (1,830.64 ÷ 1,120.00 = 1.63). For a 500 sqm office, that is PHP 915,320 a month.

VAT on that office comes to PHP 1,176,840 a year (196.14 × 500 × 12). Whether you can recover it depends on your VAT registration, so confirm with your tax adviser. PEZA-accredited companies may qualify for VAT zero-rating on rent, which can change this picture considerably.

You will also withhold 5% expanded withholding tax on rent, remit it using BIR Form 0619E, and give your landlord a BIR Form 2307. Your accountant should confirm the current rules.

The deposit: 6+2

Philippine commercial landlords commonly ask for six months of security deposit and two months of advance rent. That is eight months in cash before you move in. Using the example above:

8 months × PHP 915,320 = PHP 7,322,560 for 500 sqm.

If the deposit is calculated on the VAT-inclusive fee, as the outline assumes, this is the figure. Check your draft contract, because some landlords calculate it on a different basis. A bank guarantee in place of a cash deposit is worth asking about, since it keeps the cash in your business.

Fit-out and reinstatement

Most commercial space is handed over as a bare shell. Ellcad Construction's 2026 guide gives these ranges per sqm:

Santos Knight Frank also publishes fit-out benchmarks, and the JLL APAC fit-out guide is useful for comparing across the region.

Many leases also require you to remove the fit-out and return the space to bare shell when you leave. The outline cites Santos Knight Frank at about USD 118 to USD 235 per sqm, or roughly PHP 6,500 to PHP 13,000 per sqm. For 500 sqm, that is PHP 3.25 million to PHP 6.5 million at the end of the lease. Check whether your lease has this clause and whether the landlord will waive it.

Where flexible space fits

A flexible workspace turns most of the items above into one monthly fee. A typical agreement covers a fitted floor, rent, building charges, aircon, internet, cleaning, and reception, with a smaller deposit and a shorter commitment. That removes the fit-out and reinstatement costs. It does not automatically make it cheaper per seat, so compare quotes line by line.

Operators in Metro Manila include KMC Solutions, which offers serviced offices and PEZA-accredited floors, Acceler8, with serviced suites in Makati, and Regus, with locations across Manila. You can also compare options from several operators on FlySpaces, and our team can arrange viewings.

For any option, ask for the same five things in writing: the all-in monthly fee including VAT, what is excluded, the deposit, the notice period, and any exit charges.

On accounting, short-term agreements may be treated differently from long leases under IFRS 16 or ASC 842, but this depends on the term and the terms of the contract. Ask your auditor before you assume it.

A checklist for your next viewing

• Ask for base rent, CUSA, aircon, and after-hours rates as separate lines.
• Calculate VAT on the total, and check whether your business can recover it.
• Work out eight months of cash on a 6+2 structure.
• Get a fit-out quote and read the reinstatement clause.
• Request an all-in flex quote for the same headcount and compare it to the traditional total over your real planned term.