T

he capital is expected to see an increase in the number of empty spaces at shopping malls as more retailers go online.

According to research by property consulting firm Savills Indonesia, this year’s vacancy rate
rose to 12.7 percent as of September from 11.3 percent last year, while monthly rental costs declined 2 percent from last year to Rp 350,000 (US$23.97) per square meter.

“The rise is not significant but it indicates that the increasing trend of online shopping has begun to take its toll on retail tenancy,” Savills head of research and consultancy Anton Sitorus said recently.

The trend by business players to switch to online platforms corresponds with the growing popularity of e-commerce in the country.

The number of e-commerce visits, according to data from Similarweb, grew significantly during the third quarter of this year. Tokopedia’s visitors, for example, increased 37 percent from the previous quarter, while Shopee and Bukalapak enjoyed 26 and 13 percent growths, respectively.

Anton said the decrease in tenants at shopping malls would eventually reduce the number of people visiting malls and curb the demand for rent. “To attract tenants, shopping malls will have no choice but to lower rental costs.”

Anton added that department stores in the city suffered the most from the development of online shopping due to their failure to attract customers through their old school format, overpricing of products and an inability to be viable to customers.

Savills predicts that around 320,000 sq m of new spaces will open up in the market up to 2021. Upper-grade malls will contribute 54 percent to future supplies, while middle upper-grade ones will account for 46 percent.

“There’s a big project coming up in 2020,” Anton revealed.

Savills says the vacancy rate will rise significantly in 2020, when more spaces open up. The rental costs will also likely increase 1 to 2 percent per year until 2021.

Anton said another reason for the growth in the vacancy rate in Jakarta was the preference for retail podiums over standalone malls in this year’s total supply.

Retail podiums are commercial entities occupying spaces in the lower structures of residential and office buildings or hotels, like Green Pramuka Square in Central Jakarta as well as Sentraya Tower and L’Avenue Pancoran in South Jakarta.

“Retail podiums attract fewer customers because they do not have the drawing power of standalone malls,” he said.

Anton added that Jakarta’s recent moratorium on the construction of new malls was one of the factors that encouraged the establishment of retail podiums, which mainly catered to the needs of residents or office workers.

“We have no written regulation on the moratorium but it has been effective since then-governor Fauzi Bowo’s tenure in 2011. He verbally rejected applications on mall construction in Jakarta.”

Besides the moratorium, land scarcity as well as exorbitant prices also contributed to the establishment of retail podiums, Anton said.

He explained that the success of shopping malls depended on their accessibility, appealing designs, timing of construction, popularity of tenants and their management’s operational experience.

To prevent the vacancy rate from increasing, Savills suggested some new ideas to rejuvenate shopping malls in Jakarta.

First, developers should consider mixed-use development at the malls. Second, retail programers and tenants should work hand-in-hand to promote their businesses.

Third, malls should have draw factors in their designs to attract customers.

Fourth, malls should become a common space where everyone from any background can gather in one place.

Fifth, malls need to incorporate technology into their operations. (aak)