Occupied office space continues to decline

JAKARTA (JP): Occupied office space in the capital's central business district continued to decline in the second quarter of this year, according to property consultants.

Based on their latest survey, Procon Indah/Jones Lang Wooton Research identified a net decrease of 31,700 square meters in the review period, taking the total net decrease to 115,500 square meters in the first half of the year.

"It's the first negative growth in new demand since 1990," said Bayu Utomo, the head of the company's research department.

He said tenants continued to reduce the amount of space they rented and were surrendering office space to relocate to less expensive buildings.

Enquiries for office space dropped over the quarter. Industries remaining active and looking for office space include foreign banks, embassies, telecommunications firms, oil and mining companies and consumer goods manufacturers.

Overall occupancy decreased 2 percent to 84.4 percent over the quarter or a decline of 6.7 percent since the end of 1997, the survey said.

"Approximately 442,600 square meters of office space is currently vacant in the central business district," it added.

On the supply side, more construction projects have been put on hold due to ballooning construction and financing costs and falling demand. Seven projects totaling 397,000 square meters, or 63.8 percent of the previously identified future supply, have stopped their construction activity.

Survey

Total office space as of June was 2.8 million square meters. Total future supply to be completed by 1999 is estimated at 197,500 square meters, with no projects expected to be completed in 2000, according to the survey.

"The market will see declining occupancy throughout this year," said Utomo. "With the economic growth of Indonesia projected at below minus 10 percent in 1998, occupancy is predicted to drop to 71 percent by the end of the year," he said, adding that the oversupply had created a tenant market in Jakarta. (hen)