Office occupancy rate seen to drop next year

JAKARTA (JP): Office occupancy rates will fall four percentage points to 86 percent of total office space available by the end of next year because of new supply, a property analyst predicted yesterday.

"With approximately 600,000 square meters of new office space entering the market next year, occupancy rates are anticipated to decrease from 90 percent to 86 percent," said Peter A. Collins, the president of property consultant PT Colliers Jardine Indonesia.

He said office stock next year would grow to more than three million square meters, including more than 2.6 million square meters in premium and class A buildings in prime areas.

Next year's office take-up rate is expected to be about 300,000 square meters, taken mostly by banking, trading and service companies, he said.

Jakarta's take-up rate for office space is estimated to reach 300,000 square meters this year, the highest level achieved in the 1990s, he said.

"Despite the high takeup, the vacancy rate is expected to increase to about 14 percent by the end of 1997. But what we are experiencing here is a healthy vacancy rate as a result of large supply of office space responding to a demand driven market," Collins said.

The property market is very much demand driven. Healthy demand, particularly for good quality offices, has encouraged an office building boom this year, he said.

Projection

New office supply in 1998 is projected to increase by about 720,000 square meters. The development status for 25 percent of this supply is "probable" (planning and approval processes are in progress and financial approvals are being actively sought) and 4.4 percent is "possible" (site design concept drawings have been completed or are in progress, and finance is under discussion), he said.

The Colliers Jardine Commercial Leasing Department has observed an increasing trend of service companies relocating their businesses from prime areas -- around Jl. Thamrin, Jl. Sudirman, Jl. Gatot Subroto and Kuningan -- to periphery locations, such as Kebayoran, Pancoran and Jl. T.B. Simatupang.

"This new phenomenon is a result of heavy traffic and increased traveling time coupled with increasing choices of office space in the periphery areas," Collins said.

He said the future office tenants in prime Jakarta areas would tend to be in financial, banking and services sectors.

Colliers Jardine's data shows that net rents for new prime buildings in prime areas range between US$14 and $18 a square meter a month, while in the non-prime areas it ranges between $8 and $13 a square meter a month.

Rents are expected to remain the same or increase slightly in the next 12 months, the company predicted. (bnt)