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Jakarta Post

Demand for office space expected to bounce back after pandemic: JLL

  • Eisya A. Eloksari

    The Jakarta Post

Jakarta   /   Tue, May 26, 2020   /   03:17 pm
Demand for office space expected to bounce back after pandemic: JLL Work from home (Shutterstock/SFIO CRACHO)

Despite the surge in remote working arrangements among companies in Indonesia, demand for office space is expected to return after the COVID-19 pandemic passes, according to property consultant Jones Lang LaSalle (JLL) Indonesia.

The current health crisis might even lead to expansions in office space, as companies try to accommodate needs for physical distancing among their employees in the post-pandemic era, the firm stated.

JLL Indonesia head of research James Taylor said that Jakarta might experience the most significant impact from the pandemic on new leasing deals in the second quarter, as businesses continue to implement work-from-home arrangements.

“However, we expect tenant demand to return once the worst of the crisis has passed. In some ways, COVID-19 is accelerating the changes to the workplace that were already coming,” he said in a statement on Tuesday.

In the first quarter this year, leasing activity in the Asia Pacific region dropped 9 percent from the previous quarter last year, even though a 14 percent increase year-on-year (yoy) was recorded, JLL data show. Vacancy rates have remained stagnant at 10.9 percent in the region.

“We think offices will remain central to people’s daily business life,” said JLL Asia Pacific CEO Anthony Couse. “Looking ahead, we believe that this is a resilient sector that will continue to draw long-term investor interest and confidence.”

He added that despite a seemingly successful global adaptation to work-from-home arrangements, offices would continue to be sought after the pandemic, as remote working might not be a sustainable or optimum long-term option for all companies.

For example, JLL noted that millennials in the region struggled with smaller apartment sizes, slow internet connectivity and the need to juggle family duties while working from home. Meanwhile, offices still play a central role in creating spaces for collaboration and interaction and for boosting staff morale and productivity.

“The office, as we know it, will evolve. Owners and investors who can take advantage of this opportunity to think about long-term redevelopment plans and designing or refitting their facilities will benefit greatly,” Couse said.

Companies might also consider flexible options such as coworking spaces as an alternative to short-and-medium-term expansion plans, JLL notes.

Previously, real estate services firm Colliers International projected that if more companies implemented remote working arrangements, demand for office space was expected to drop, according to its report released in April.