For a business entering the Philippines for the first time, finding an office can look deceptively simple.
Choose a location, inspect a few buildings, negotiate the rent and sign a lease.
In reality, the wrong decision can leave you with an office your employees dislike travelling to, unexpected fit-out and operating costs, restrictive lease terms, compliance problems or a space that no longer works as your team grows.
The good news is that most of these problems are avoidable.
Here are eight things we believe businesses should get right when sourcing their first office in the Philippines.
1. Start with your people, not the building
One of the biggest mistakes is choosing an office because senior management likes the location.
Your employees have to travel there every day.
Before deciding on Makati, BGC, Ortigas, Quezon City, Alabang, Cebu or another location, understand where your workforce is likely to live and how they will get to work.
Commutes in major Philippine cities can be significant. Access to MRT/LRT, buses, major roads and other transport can materially affect recruitment, attendance and employee retention.
Current office-market guidance also continues to emphasise transit-oriented locations because accessibility has become an important part of workplace strategy.
A prestigious address is of little value if your employees do not want to travel there.
2. Use a reputable commercial property adviser
Do not rely solely on online listings or an introduction from somebody who happens to know a landlord.
A good commercial property adviser should help you understand the market, compare buildings, negotiate commercial terms and identify issues you may not know to ask about.
Importantly, ask whether they are representing you, the landlord or both. You should also request comparable properties rather than falling in love with the first suitable space.
The objective is not simply to find an office. It is to understand whether the rent, incentives and lease conditions are reasonable for that location and building.
3. Understand the real cost, not just the rent
The advertised rental rate is rarely the complete cost. Before comparing properties, establish exactly what is included. Ask about rent, VAT, association or common-area charges, electricity, water, air-conditioning charges, parking, internet, security, cleaning, maintenance and any building management fees.
You should also understand the security deposit, advance rental requirement and when the rent actually begins.
Philippine tax treatment also needs to be considered. Lease payments for real property used in business are generally subject to 5% expanded withholding tax, while VAT may also apply depending on the landlord and transaction. Your accountant should confirm the treatment before the lease is signed.
Compare the total occupancy cost, not simply the price per square metre.
4. Be very clear about what you are actually receiving
A bare-shell office and a fitted office are very different propositions. Confirm what remains in the space when you take possession.
Does it include workstations? Meeting rooms? Cabling? Air-conditioning? Lighting? UPS or backup power? Server rooms? Furniture? Access-control systems? If the space requires fit-out, understand who approves the design, how long approvals take and whether construction can begin before the formal lease commencement date.
Negotiate a realistic rent-free fit-out period wherever possible. A cheaper office requiring significant construction can easily cost more than a higher-priced space that is ready to occupy.
5. Check the building, landlord and paperwork
The quality of the office is only one part of the decision.
Understand who owns the property and whether the person signing the lease has authority to do so.
Ask about the building's Certificate of Occupancy, fire-safety arrangements, building rules, permitted business activities and any restrictions affecting your operation.
The Bureau of Fire Protection's requirements connect fire-safety certification with business permitting, while valid occupancy documentation can also form part of regulatory requirements.
If you plan to operate 24/7, install specialist technology, bring in substantial equipment or require higher security, tell the landlord before signing. Do not assume something is permitted simply because another tenant appears to be doing it.
6. Treat the lease as a commercial contract, not an administrative document
Commercial leases in the Philippines should be reviewed carefully.
The Civil Code establishes core rights and obligations between lessors and lessees, but in practice much of your commercial position will depend on the lease you negotiate. Pay particular attention to term, renewal rights, escalation, early termination, reinstatement obligations, subleasing, assignment, repairs, insurance, access, signage and what happens if the premises become unusable.
One clause that looks insignificant when signing can become extremely important two years later.
Have the lease reviewed by a Philippine lawyer experienced in commercial property.
7. Think about what happens if you grow, or shrink
Businesses often lease space based on today's headcount. That can be expensive. If you expect rapid growth, ask whether additional space is available within the building and whether you can obtain rights over adjacent areas.
If your headcount is uncertain, a shorter lease, serviced office or flexible workspace may be more appropriate initially. Flexible workspace remains a growing part of the Philippine office market precisely because companies are prioritising flexibility and scalability.
Do not sign a long lease simply because it appears cheaper per desk. Flexibility has a value.
8. Negotiate before you become emotionally committed
Once management has decided that a particular office is "the one", negotiating leverage usually disappears.
Compare several genuine alternatives. Then negotiate the entire package, not only rent. That can include rental rate, escalation, security deposit, rent-free periods, fit-out period, furniture, parking, reinstatement obligations, renewal rights and early termination.
Most importantly, document every concession. If the agent or landlord tells you something verbally, make sure it appears in the Letter of Intent or final lease.
The simple rule
Your first Philippine office should support your business, not become another business problem to manage.
Choose the location around your workforce. Use a reputable adviser. Understand the full cost. Check the building and landlord. Negotiate the lease properly. And make sure you understand the regulatory and tax implications before committing.
The office with the lowest advertised rent is not necessarily the cheapest. And the most impressive building is not necessarily the right one. The objective is to find a space your people can reach, your business can afford and your operation can grow into, with no surprises after the lease is signed.
This article provides general commercial guidance only and should not be treated as legal, tax or accounting advice.