Hybrid Work, Wellness, and Sustainability in the Future of Commercial Real Estate

To compete with the comfort of the home office, the modern workplace must adopt an Activity-Based Working (ABW) model. This design philosophy acknowledges that different tasks require different environments, splitting the office into two primary functions: Retreat and Connection.

Despite the buzz around collaboration, a study indicates that 57% of the workforce requires quiet, focused areas to perform optimally. The open-plan office, once hailed as a collaboration booster, often fails here due to noise pollution.

• Acoustic Solutions: The integration of purpose-built soundproof pods is becoming essential. Ideally, these should offer soundproofing ratings around 31  decibels.

• Quiet Zones: Underutilized corners are being converted into library-style quiet zones, offering a crucial escape from the kinetic energy of team areas.

Collaboration remains the primary driver for office attendance. Modern design supports this through modular furniture that can be reconfigured instantly for workshops or town halls. Crucially, these spaces are moving toward Neuro-Inclusive Design. By incorporating customizable lighting, sound masking technology, and varied sensory zones, offices can support diverse cognitive styles, ensuring that the workspace is accessible and productive for everyone.

Sustainability has graduated from a “nice-to-have” to a guiding principle of asset operation. This is not merely about environmental stewardship; it is about the health of the occupants.

Biophilic design—integrating nature into the built environment—offers quantifiable benefits to human capital. Research suggests that introducing plants and natural elements can lead to:

• A 45% increase in creativity.

• A 38% increase in productivity.

• A 15% reduction in stress levels and absenteeism.

Strategies include maximizing natural daylight, utilizing moss walls, and using natural materials like wood and stone to create a calming, restorative environment.

In the post-pandemic era, air quality is a health and safety mandate. To maintain cognitive function and minimize viral transmission, keeping indoor CO2 levels low is critical.

• Standard: < 800 ppm (CO 2)

• Ventilation: Minimum rates should be maintained at 16 L/s/person. To meet stricter standards (like those in Spain), rates of 20 L/s/person are required.

Leading developments are now securing certifications such as EDGE (Excellence in Design for Greater Efficiencies) and the WELL Building Standard, which measures features affecting air, water, light, and mind. In the Philippines, providers are setting benchmarks by achieving both B-Corp and WELL certifications

The experiential office relies heavily on the integration of smart technology. Artificial Intelligence (AI) and the Internet of Things (IoT) are transforming static buildings into responsive ecosystems.

• Smart Operations: AI enhances building management systems (BMS) to optimize energy consumption and predict maintenance needs before systems fail.

• Touchless Security: The days of the analog key are over. Modern access utilizes biometric scanners, facial recognition, and RFID to create a seamless, touchless entry experience.

• Data Analytics: IoT sensors allow landlords and tenants to monitor occupancy in real-time. This data is vital for tenants to justify their physical footprint and for landlords to understand how their communal spaces are actually being used.

The Philippines, specifically Makati City, serves as a microcosm of these global trends. Makati remains the premier financial hub, attracting multinational corporations (MNCs). As of Q2 2025, the market has seen stable demand for Grade A offices, with vacancy rates improving to 10.5%.

However, the market remains tenant-leaning. Landlords are increasingly offering concessions, with 56% of respondents in a recent survey citing lower base rents as their preferred incentive.

The geography of Makati reflects the diversity of tenant needs:

• Ayala Avenue (CBD): The home of corporate prestige and high-rise visibility.

• Salcedo Village: A blend of commercial and residential, popular for flexible spaces and a community vibe.

• Legazpi Village: A creative hub attracting startups and SMEs, hosting unique providers like The Company Makati, which offers specialized Japanese Desk Services.

The flexible workspace sector in the Philippines is booming, witnessing 83% growth in just two years. Virtual offices are also rising as a strategic tool for global firms to test the market and comply with SEC/BIR regulations without committing to long-term leases.

To finalize the transition from “building” to “destination,” CRE is adopting a hospitality mindset. Landlords are developing shared amenity spaces—”Jewel-Box” rooms for intimate gatherings or clubhouse-style lounges with full-service bars—to differentiate their assets.

This model demands a service layer previously reserved for hotels: 24/7 access, business-grade security, and onsite concierge support. By providing these shared resources, landlords fill the gap for tenants who may be cautious about building such extensive amenities within their own leased footprint.

The future of commercial real estate lies in strategic adaptation. The industry is moving beyond the commodity of “space” to the service of “experience.” For investors and landlords, the path forward involves viewing CAPEX on design, wellness certifications (WELL, EDGE), and technology not as costs, but as future-proofing mechanisms.

As hybrid work solidifies, the buildings that will succeed are those that prioritize the human element—creating ecosystems that are flexible, sustainable, and deeply attuned to the well-being of the people inside them.

• Budgeting: Always budget for the VAT-inclusive TOC, not the headline Base Rent. Expect a non-negotiable 30% to 50% premium above the base rate. Use the Net Effective Rent (NER) calculation for apples-to-apples comparison between properties.
• Capital: Immediately set aside funds not just for the 4-to-8-month upfront payment, but also for the extensive, high-cost bare shell fit-out (₱20,000 – ₱50,000/sqm). This should be treated as a multi-million peso capital expenditure.
• Risk Assessment: Quantify the catastrophic contingent liability associated with pre-termination and the cost of the final space restoration/demolition, and track it on the balance sheet.

• Opex Control: Prioritize negotiating explicit caps on the annual escalation of CAM charges (e.g., tie them to a reasonable inflation index like CPI or a fixed annual percentage, typically 3-5%).
• AC Terms: Secure favorable terms for 24/7 AC utility billing or, ideally, select a building that offers individually metered AC systems to gain control over energy costs.
• Deposit Mitigation: Attempt to negotiate the security deposit down to the lower end (3 or 4 months’ gross fee) or utilize a Bank Guarantee to free up critical working capital.
• PEZA Alignment: If eligible (BPO/IT/export), strictly locate in a PEZA-accredited IT Center; the long-term tax and VAT zero-rating benefits far outweigh the rental premium and are critical for maximizing operational efficiency.

For businesses prioritizing cash flow, speed to market, and operational flexibility (especially those unable to commit to a 7-year term or who need immediate entry), flexible workspaces (serviced offices, co-working) should be explored.

• Serviced Offices/Co-working: While the effective rate per person might be higher (starting around ₱8,190 per person per month for a private suite), they eliminate all upfront deposits, fit-out costs, Opex management headaches, and long-term pre-termination risk, providing essential agility. They are ideal for market entry, pilot teams, or project-based operations.
• Future Market Outlook: While Makati office occupancy remains tight in the premium sector, the overall Metro Manila supply pipeline is slowing. Demand is shifting slightly away from pure BPO and towards data center operations, FinTech, and regional headquarters. This suggests that the quality of infrastructure (redundancy, fiber connectivity) will become even more critical than headline rent in the coming years, reinforcing the value of Prime and Grade A assets. The choice between traditional leasing and a flexible model must be based on the corporate commitment to a 3-to-7-year operational horizon.