Manila’s data center development pipeline contracted to 97 megawatts in the first half of 2026, a 13% decline as new project announcements lagged behind recently completed facilities, according to Cushman & Wakefield‘s Asia Pacific Data Centre H1 2026 Update published August 25. The contraction reverses growth momentum in a market where operational capacity simultaneously expanded by 22%, reaching 90 megawatts across 28 facilities run by 16 operators.
TL;DR: Manila’s data center development pipeline fell 13% to 97 MW in H1 2026 as new project announcements failed to replace completed capacity, even as the city’s vacancy rate remained the highest among 15 profiled Asia-Pacific markets at 43.6%.
Pipeline Composition Shifts From Construction to Planning Stage
The 97-megawatt pipeline comprises 5 MW under construction and 92 MW in the planning stage, the real estate consultancy reported. Capacity actively under construction dropped from 22 MW in the second half of 2025, primarily as projects reached completion and entered service. Planned capacity edged upward to 92 MW, but Cushman & Wakefield noted the increase failed to fully offset the newly delivered supply that exited the pipeline.
The pipeline contraction positions Manila against the grain of regional trends. Across Asia-Pacific, developers added 7,103 MW to the development pipeline during the first half, lifting the regional total to 26,455 MW—with 4,764 MW under construction and 21,691 MW in planning stages, according to the report.
Vacancy Rate Improves Despite Remaining Highest in Region
Manila’s colocation vacancy rate improved to 43.6% from 48% in the second half of 2025, suggesting demand absorbed part of newly delivered capacity, Cushman & Wakefield said. The city now operates 28 data centers across 16 providers, with operational IT capacity reaching 90 MW after the 22% expansion.
The 43.6% vacancy rate represented the highest among 15 primary and secondary Asia-Pacific markets individually profiled in the report. Ho Chi Minh City posted 34.8% vacancy, followed by Perth at 34.3%, Delhi National Capital Region at 10.9%, Auckland at 6.4%, and Taipei at 5.6%, the consultancy reported. Primary markets ranged from 0.7% in Johor to 22.1% in Bangkok.
Regional vacancy slipped to 10.3% from 10.9% in the second half of 2025 as 1,372 MW of new operational capacity came online and demand continued to absorb supply, according to the report. The contrast underscores Manila’s position as a market with significant available capacity relative to more saturated regional hubs.
Power Constraints Reshape Regional Investment Patterns
Artificial intelligence and cloud investment across Asia-Pacific have entered a period of rapid but power-constrained execution, with electricity availability becoming a key bottleneck for the industry, Cushman & Wakefield said. New capacity is increasingly shifting away from saturated hubs toward peripheral areas and new locations, while investors favor larger projects with clear AI-driven demand and the capacity to support hyperscale operations.
The consultancy noted that future data center investment is expected to concentrate in markets with scalable power supply, developable land, and strong network connectivity as these factors increasingly determine the pace of new capacity development. Philippine data centers face power supply challenges as the sector expands, with earlier projections showing facilities could consume 30% of grid capacity.
Manila Remains Classified as Emerging Market With 18% Vacancy Rate
Manila remained classified as an “emerging” data center market, alongside Pune, Batam, Taipei City, Auckland, Perth, Bengaluru, Canberra, Busan, Ho Chi Minh City, Hanoi, and Brisbane, according to the report. Emerging markets collectively accounted for 7% of Asia-Pacific’s operational data center capacity, while their cumulative vacancy rate declined to 18% in the first half from 26% in the previous six months.
Cushman & Wakefield said these markets continued to draw investment as digital infrastructure and enterprise demand improved. In the Philippines, the consultancy cited investments in AI, financing, and power infrastructure as factors supporting the sector’s longer-term growth. The firm referenced the launch of the National Artificial Intelligence Center for Research and Innovation to support AI research, advanced computing, and industry collaboration.
The International Finance Corporation committed $170 million to the Philippine data center sector, while Converge Information and Communications Technology Solutions commissioned a 12-MW data center near Manila during the period, the report noted. Earlier capacity projections anticipated Philippine data center capacity would triple by 2028 as AI infrastructure demand accelerates, though the H1 2026 pipeline contraction suggests a more uneven development trajectory.
Why This Matters Now
The 13% pipeline contraction signals a cooling period for Manila’s data center development even as operational capacity expands and regional markets accelerate investment. For IT managers evaluating colocation or cloud infrastructure decisions in the Philippines, the 43.6% vacancy rate translates to immediate availability across multiple providers—but also suggests pricing pressure may not materialize until absorption rates improve. Decision-makers planning multi-year infrastructure commitments should weigh Manila’s current oversupply against longer-term projections of triple capacity by 2028, recognizing that the gap between planning-stage announcements and funded construction remains wide.
The power constraint theme reshaping regional investment carries direct implications for Philippine enterprises considering on-premises versus colocation strategies. As electricity availability becomes the binding constraint for hyperscale deployments, facilities with committed power allocations will command premium pricing, while markets lacking scalable supply—including parts of Metro Manila—may see delayed capacity additions. Organizations banking on near-term colocation expansion in specific geographies should verify power commitments behind announced projects rather than treat planning-stage megawatts as assured supply.
The contrast between Manila’s pipeline contraction and the broader Asia-Pacific surge underscores the uneven distribution of AI-driven infrastructure investment. PLDT’s 100-megawatt Southern Luzon hyperscaler project represents the scale needed to attract global cloud providers, but the absence of similar-scale announcements in the H1 2026 Cushman report suggests most Philippine capacity remains enterprise-focused rather than hyperscale-targeted—a distinction that matters when planning disaster recovery architectures requiring geographic redundancy across multiple availability zones.
