Office tenants in Jakarta still undergoing massive downsizing

One tenant surrendered around 30,000 sqm of space.

Jakarta's office sector is still seeing a persistent downsizing trend among occupiers. Though some take-up was recorded, it still is not enough to cover the massive downsizing in the market. According to JLL, net absorption in 2Q21 was at -31,000 sqm. JLL says the biggest downsize came from one tenant which surrendered around 30,000 sqm, while another example was from one flex space operator which released almost 6,000 sqm.

The overall Grade A vacancy rate increased to 35%. Relocations and consolidations still occurred; meanwhile, several tenants were still active in the market, seeking relatively smaller office spaces.

Here's more from JLL:

Trinity Tower enters the market

One new Grade A building was completed in 2Q21; namely, Trinity Tower, and the recorded occupancy rate was still low.

The overall occupancy levels remained low at 65% in 2Q21. Only one Grade A building is expected to complete in the remainder of 2021, since one project was pushed to early 2022.

Rents fall further in 2Q21

Rents came down by around 3.0% q-o-q in 2Q21, as landlords were still willing to provide competitive rents to entice tenants.

Rents have been falling since mid-2015 on the back of rising vacancy rates and a packed supply schedule. Due to limited demand and downsizing trends, rents will drop further.

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 90,000 sqm is expected to complete by end-2021 causing occupancy to remain under pressure.

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