Jakarta Grade A office rents down 2.2% in Q3

There are still massive discounts available for tenants.

In 3Q21, JLL revealed office rents in Jakarta remained under pressure and a decline of 2.2% q-o-q was recorded for Grade A buildings. Rents are already extremely affordable in Jakarta and landlords are still willing to provide competitive rents to entice tenants. 

Affordable rents are key to capturing demand. Rents have been falling since mid-2015 on the back of rising vacancy rates and increased supply. Due to limited demand and downsizing trend, rents will most likely drop further.

Here’s more from JLL:

Vacancy rate slightly decreased 

Technology companies were the driving force behind deals in the office market in the quarter, with education-technology companies being the biggest contributor. Most of these deals also involved relocations and upgrading to Grade A buildings. Several other tenants were still active in the market, seeking relatively smaller office space. 

A positive net demand was recorded at around 23,000 sqm with the overall Grade A vacancy rate slightly decreasing to 34%. One flex-space operator was active in opening two new centres in the CBD area. 

No new completions in the quarter 

No new Grade A buildings were completed in the quarter and overall occupancy levels remained low at around 66%. 

Only one Grade A building is expected to be completed in the remainder of 2021; namely, Autograph Tower (previously Thamrin Nine Tower 1). Meanwhile, Indonesia 1 is being pushed back from 2022 to 2023. 

Outlook: Market pressures are likely to remain 

Rents are likely to continue to drop further in 2021 as market pressures remain due to the pandemic. Another building with a total of 94,000 sqm is expected to be completed by end-2021, causing occupancy rates to remain under pressure. 

With vacancy rates in unprecedented territory, it is likely that a significant number of landlords will continue to face vacancy pressures due to weakened demand and continued downsizing trends.