D

emand for office space in Jakarta is set to rebound this year on the back of the rapid growth of technology companies, property consultants Jones Lang LaSalle (JLL) and Colliers International reveal.

JLL Indonesia’s head of research, James Taylor, said following the trend seen in other parts of the world, technology companies also drove demand for offices in Indonesia’s capital, especially in the Central Business District (CBD).

“E-commerce, fintech, online gaming companies, travel booking websites — both local and international — have all been extremely active throughout 2016, and in particular 2017 and also moving into 2018,” Taylor said at the launch of JLL’s property quarterly report on Wednesday.

Net absorption of office space in the CBD reached 240,000 square meters last year, higher than the three previous years combined, said the report.

The figure totaled 50,000 sq m in the first quarter of this year, nearly equaling that of 2016.

Taylor added that the rise of co-working spaces, which were relatively new to Indonesia especially in the CBD, also contributed to the greater demand for office space.

“Local and international co-working groups, which have already been expanding, are looking to expand even further as we move into 2018,” he said.

Taylor added that while technology-related tenants made up about 15 percent of Grade A space leased in the CBD during the first quarter, the number would likely rise to 30 percent by the end of the year.

JLL projected that the overall demand for office space would likely continue to climb throughout the year. However, it cautioned that despite the improving demand, the occupancy rate of office space would likely remain low due to availability.

“A lot of construction that began after the global financial crisis [in 2008] was coming to completion in 2015 and onwards, so we’ve got a lot of new supply,” Taylor said.

There will be a total of 630,000 sqm of office space by the end of the year, including 189,000 sq m finished in the first quarter, with projects such as the District 8 Treasury and Prosperity Towers in Senayan CBD.

Consequently, the office occupancy rate, which now stood at around 78 percent, would bottom out next year to about 75 percent before leveling off as supply diminished, according to JLL.

Another report from Colliers International Indonesia also projected a similar trend.

The flourishing e-commerce sector, which expands rapidly, and the surge in users of co-working spaces jacked up demand for Jakarta office space in the CBD, including Sudirman, Gatot Soebroto and Thamrin.

Demand for office space hit around 77,600 sq m in the first quarter of this year, nearly fourfold the figure of the corresponding quarter last year that settled at approximately 20,000 sq m.

Demand for co-working spaces contributed at least 30 percent to the overall office space demand, while the majority was triggered by e-commerce firms and others.

Several e-commerce firms made significant rentals of more than 5,000 sq m in Jakarta office buildings, said Colliers’ senior associate director for office services, Sutrisno Rachmadi Soetarmo.

“The demand for office space by e-commerce and co-working operator companies, local and foreign, is high. They are big players this year,” he said.

However, despite the strong demand, the occupancy rate of office property fell to 81.1 percent in the first three months of the year from 84.1 percent a year earlier because of bigger supply.