Tips for survival in the office rental business<\/p>\n
Mahendra Gautama, Contributor, Jakarta<\/p>\n
The office building business in Jakarta really started to
\nflourish when the Indonesian government built the Bank Indonesia
\nbuilding on Jalan MH Thamrin in 1957. The economic boom in the
\n1970s, due largely to the extraordinary hikes in oil prices, made
\noffice compounds expand towards Kuningan, Jl. Sudirman and Jl.
\nGatot Subroto, an exclusive area now known as the Central
\nBusiness District (CBD) of Jakarta.<\/p>\n
Banking deregulation that soon followed also prompted the
\nsecond economic boom in Indonesia with many new office buildings
\nspringing up in the CBD. This area therefore has secured a firm
\nposition as a business center and the chief supplier of office
\nspace in Jakarta.<\/p>\n
However, the economic crisis hit the country in 1997 and hurt
\nthe office building business as well. Bank Indonesia records
\nshow that the average occupancy rate in those years dipped to 75
\npercent, the lowest ever in the history of the office building
\nbusiness in Jakarta.<\/p>\n
Budget contraction, reduction in the number of employees and
\nconsolidation in local as well as foreign companies as a result
\nof the crisis were the main reason for this low occupancy rate.
\nThis drop turned the office space market into a tenant's market
\nand building owners had to work extra hard to lure the
\nincreasingly smaller number of prospective tenants.<\/p>\n
In 2003, the office space market in Jakarta has shown a slight
\nimprovement and the CBD remains in its position as the leading
\nsupplier of office space in this city. A market research report
\ntitled \"Jakarta Office Market Overview of Q2 2003\" issued by a
\nleading property consulting agency Colliers International shows
\nthat the CBD area contributed 71.6 percent or 2,992,502 square
\nmeters of a total of 4,176,682 square meters of office space in
\nJakarta.<\/p>\n
Jalan Sudirman and Jl. MH Thamrin accounted for 65 percent, or
\n1,935,646 square meters, of the total office space in the CBD
\narea. Next came Kuningan (23 percent or 692,815 square meters)
\nand Gatot Subroto (12 percent or 364,041 square meters). The
\ntotal office space available in the CBD is estimated to rise by
\n110,000 square meters in 2004, following the completion of the
\nnew Wisma Mulia building.<\/p>\n
In terms of building types, which are usually determined based
\non the quality of the physical aspect of the buildings, the
\nbuilding management, facilities and proximity to the CBD, premium
\ngrade buildings took the lion's share (37.1 percent or 1,111,211
\nsquare meters), to be followed by grade B buildings (32.1 percent
\nor 959,543 square meters) and grade A buildings (30.8 percent or
\n921,749 square meters).<\/p>\n
As for the average occupancy rate in Jakarta, a property
\ncommercial survey of the first quarter of 2003 conducted by Bank
\nIndonesia shows that it stands at 81.01 percent, an increase of
\n2.23 percent over the figure recorded in the same period of
\nprevious year. The CBD area enjoys a rise of 2.01 percent, while
\nnon-CBD areas registered an increase of 2.84 percent.<\/p>\n
This hike is yet to give peace of mind to players in office
\nspace business. Most of them are still worried about the macro-
\neconomic situation of the country and the threat to its security
\nstability. It is not surprising, therefore, that the majority of
\nbuilding owners have continued to focus themselves on maintaining
\ntheir present tenants by allowing them a discount or other
\nspecial incentives.<\/p>\n
In fact, allowing a discount is not the only way to survive
\nduring hard times. Take, for example, CEO SUITE, an office
\nservice provider in Jakarta, located at Wisma GKBI and the
\nJakarta Stock Exchange. This company was set up in 1997 when
\nIndonesia was in its acute economic throes. Still, applying its
\nconcept of fully integrated serviced offices, this company has
\nmade itself one of the main players by having secured a sizable
\nmarket niche in Jakarta as well as in several countries in the
\nregion.<\/p>\n
The company's president director, Ms Mee Kim, said that the
\nkey to their success in competing with similar companies and
\nconventional office space owners was the company's focus on the
\ncreation of a great customer experience. This, she said, was
\nbased on the company's main business philosophy, among others,
\nbeing proactive towards a tenant's needs and sparing no effort or
\ntime to meet those needs, including the availability of
\ncontingency and back-up plans regarding all the facilities in the
\nbuilding, total flexibility in lease duration, space arrangement
\nand room design as well as in the use of facilities. Their
\ndedicated and professional staff with years of service industry
\nexperience are also their plus points.<\/p>\n
\"Thanks to this customer-oriented philosophy, CEO Suite has
\ndeveloped its services. You will find even the CEO Suite janitors
\nspeak fluent English. Usually, our staff members can speak other
\nforeign languages. Besides, we supply state-of-the-art
\nfacilities, including IT devices, sophisticated meeting rooms and
\na wide range of office facilities. In short, we wish to satisfy
\nall our tenants,\" Mee Kim said.<\/p>\n
CEO Suite has its own rather unique view about the role that
\nmarketing can play during hard times. While the majority of such
\ncompanies tend to reduce their marketing budget, CEO Suite goes
\nin the opposite direction. \"In bad times, you must be more
\naggressive in marketing than before,\" she said. Cocktail parties,
\ndirect marketing and direct e-mailing are some of the ways that
\nCEO Suite has often used to get the word out.<\/p>\n
As a result, CEO Suite has continued to make progress in this
\nbusiness. It now has its own office centers in Singapore, Kuala
\nLumpur and one opening in October in Shanghai, China. \"The key to
\nthe success of CEO Suite is its promotion by word of mouth from
\nsatisfied customers,\" she added.<\/p>\n
In the final analysis, the possibility for a company to score
\nsuccesses is greater as long as it takes into account what its
\ncustomers really need, regardless of whether it is boom or bust
\nin the general economic condition.<\/p>",
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