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Trends, accessibility keys to boosting retail space occupancy rate, property consultant says
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A shopping mall in Central Jakarta. (JP/dra)
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property consultant has projected a downward trend in the overall occupancy rate of Jakarta’s retail spaces in the coming years and, as such, is suggesting that landlords and retailers improve accessibility and target millennials by developing leisure spaces.
Colliers International said in its latest report that the retail space occupancy rate in the city stagnated at 83.6 percent throughout 2018 and is expected to fall to between 82 percent and 82.5 percent in 2019.
Colliers senior associate director Ferry Salanto said recently that the expected decline of the occupancy rate was due to the projected retail space increase by around 430,000 square meters in the next three years.
“Additional supply will increase, which will inevitably lower the occupancy rate,” he said in Jakarta, adding that three new shopping malls were to be built in 2019 alone.
The demand for new spaces in malls would come mostly from food and beverage and home appliance businesses, he said.
He acknowledged that the demand might be influenced by current trends, as millennials tend to prefer using leisure places at malls over traditional retailers.
He said that, as long as landlords and retailers were willing to adjust to the trends, the growth of the occupancy rate would not be affected by online shopping.
“Malls with innovative and dynamic changes will always attract more visitors,” he said.
Several retail spaces in Jakarta were reportedly left vacant following closures of outlets owned by brands because of aggressive competition with online marketplaces and the lingering impact of slowing consumer demand.
Recently, publicly listed retailer Hero Supermarket closed 26 of its stores and laid off 532 employees as part of its efficiency measures.
PT Central Retail Indonesia, the local operator of Thai retail giant Central Department Store, announced the closure of its store at Neo Soho Mall in West Jakarta, which the company said was underperforming.
In order to thrive, Ferry suggested that mall construction projects take into account infrastructure and transportation accessibility in addition to catering to millennials.
Sesilia Pongoh, founder of analytics tool Locator Logic, said locating retail spaces in accessible spots would support the success of retail businesses and eventually boost the growth of the retail space occupancy rate.
By combining technology and location information, Locator Logic presents data about the characteristics of retail space locations to potential tenants.
“We can deliver data related to population, social economy, infrastructure and transportation surrounding retail spaces for those who wish to do their business in certain locations,” she said.
She explained that Locator Logic would help tenants in doing research on potential locations for their businesses, the environment in said locations and competitors.
The analytics tool can also help tenants to decide where to open their businesses and what business strategy to choose.
Meanwhile, Ferry projected that the retail space sector would still be in a consolidation phase in 2019.
He said he hoped that by 2020, the retail space market would rebound following a possible improvement of the country’s economy.
Statistics Indonesia (BPS) announced on Wednesday that household spending, which accounts for more than half of the GDP, grew 5.08 percent in the fourth quarter of 2018, higher than 4.98 percent growth recorded over the same period in 2017, thanks mostly to increased retail sales and wholesale car and motorcycle sales. (aak)
