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View all search resultsOffice space occupancy to drop further in 2021: Colliers
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O
ffice occupancy rates in Indonesia’s major cities are expected to plunge further next year as supply increases at a time when demand remains weak amid the coronavirus pandemic.
According to a projection by property consultancy Colliers International, office occupancy will plunge to just 78 percent in the central business districts (CBD) of Jakarta and Surabaya and to 79 percent in non-CBD areas, the lowest rates in years. This compares with 83.5 percent in the first quarter of this year for CBD and 84 percent for non-CBD areas.
“This year is indeed a tough year for the office sector,” Colliers senior associate director of research Ferry Salanto said. “With the abnormal current market conditions and the large supply that is almost the same as last year’s, and given the fact that in the next year supply will be higher, occupancy will be decreasing,” he said.
Jakarta and Surabaya have eased large-scale social restrictions (PSBB). However, public concerns over COVID-19 remain high as cases recently surge in the two major cities. While some offices are slashing capacity and rotating staff to enter office space, others still strictly enforce a work-from-home policy.
“During the hardship, tenants are generally becoming much more vigilant in making decisions related to leasing a new office or extending a lease contract. Such options are most often postponed by companies,” Colliers’ report reads. “The way of thinking about [the] workplace is slowly changing, with current emphasis on safety and hygiene.”
Colliers believes that the working-from-home (WFH) trend is likely to negatively affect office space utilization. In Jakarta, office absorption shows a decreasing trend from normal market conditions.
Meanwhile, supply of office space in the capital’s CBD may grow by 0.5 percent in the second half of this year from 6.87 million square meters (sqm) at present. In the non-CBD areas, the current 2.49 million sqm of office space will increase by 4.8 percent by the end of the year as a large number of new projects will be completed.
