Serviced office: The right choice for good and bad times

Serviced office: The right choice for good and bad times

Rudijanto, Contributor, Jakarta

Although the outlook for the overall office market remains
gloomy, serviced office providers are upbeat that business will
continue to flourish despite an expected drop in foreign direct
investment (FDI) and the political uncertainty of the upcoming
general election.

Normally, occupying one full floor of a building located
within Jakarta's Central Business District (CBD), such as Wisma
GKBI, the Jakarta Stock Exchange, Menara Kadin or Wisma Danamon
Aetna Life, these serviced office providers have proven capable
of taking advantage on any situation in the country.

Offering extremely flexible space and leasing terms that
conventional office buildings have trouble matching, these
serviced office companies are highly attractive not only during
the good times but during the bad times as well.

For instance, while most conventional building offer rental
periods of at least six months, these serviced offices can offer
daily and monthly rental packages with very flexible rental
space, even as small as a single table space.

Providing fully furnished offices with exceedingly capable
secretarial staff, these serviced office companies are the
logical choice for those who have no need for their own office
and staff in Jakarta, as well as for those who are downsizing
their presence in the country.

For those who have no urgent need to rent office space, these
serviced office companies can offer them a virtual office
package. Under this package, serviced office companies offer
their clients a Jakarta mailing address, telephone and fax
numbers and excellent secretarial services.

"Last year was the peak for our business with more than 95
percent of our saleable office space occupied. Our virtual office
clients also rose from 45 to 98 clients. This year we expect to
hit our target of 180 virtual office clients," Lena Thong, the
general manager of the Plaza Business Centre (PBC), said.

With bright prospects even amid gloomy FDI forecasts for the
year, this Hong Kong-based serviced office company plans to
expand its business in Jakarta in the middle of this year.

PBC is not the only serviced office company doing well.
Another Hong Kong-based serviced office company, The Executive
Centre (EC), is also enjoying the feast. Currently, of EC's 36
saleable office spaces, 35 are occupied.

"We even have now what we call a 'positive problem', namely
some of our tenants want to expand the space of their offices,
causing us some problems, for instance because they want to
expand in a particular direction in such a way that affects the
space of other tenants," said EC business development manager
Viera Djawahir.

A local serviced office company that has gone international,
PT Citra Eksekutif Otorita (CEO), is also enjoying good times
with a more than 90 percent occupancy rate. Established in
Jakarta six years ago, CEO has spread to, among others, Kuala
Lumpur, Singapore and Shanghai.

"This year we plan to expand to either Korea or Vietnam,"
CEO's Korea-born Indonesian owner and president, Mee Kim, told
The Jakarta Post.

With a total of 80 offices located in the Jakarta Stock
Exchange building and Wisma GKBI, Mee Kim has a very optimistic
outlook for her company based on this January's performance.

"January is a good month for us since every year constitutes a
time to grab more opportunities for us. This year will be a good
time because some companies will be downsizing," Mee Kim said.

EC's general manager, Rosaline Mayapada, also is optimistic,
revealing that the company saw an increase in inquiries in
January. She added that some clients had also asked for
extensions.

"The business trend is good. We still receive inquiries even
from outside the country. Some of our virtual clients have also
requested some office space. Thus, there is a trend that virtual
clients tend to become in-house serviced office tenants,"
Rosaline said.

The virtual office business is expected to keep on growing.
While there is a perception that virtual office clients are
unreliable businesspeople or companies, most serviced office
companies reject such perceptions.

Rosaline said that among the virtual office clients were big
corporations such as mining companies that only needed a Jakarta
address and contact number, while most of their activities were
on mining sites such as in Balikpapan.

Other virtual office clients include trading companies and
overseas companies that feel they have no need for a physical
presence in Jakarta other than a mailing address and contact
number. For instance, CEO's virtual clients are mostly
multinational companies, with only about 5 percent local
companies.

"Last year, we hit a record with up to 108 virtual clients,
most of whom are consultants, such as financial and legal
consultants," Lena said.

Aside from providing very flexible leasing terms, most of
serviced office companies also act to provide any necessary
information to their tenants and clients.

"We don't limit our services to only serviced offices. For
instance, for a newly arrived U.S. company we help in securing a
work permit, head-hunting, travel arrangements, as well as
residential searches," says Mee Kim.

Though other serviced companies also provide such assistance
to their tenants and clients, Mee Kim said that CEO does half of
the consultancy work itself, rather than simply sending clients
to consultancy companies.

"In this sense, we are the only ones in the market," says Mee
Kim.

PBC's Lena believes that her company has certain advantages in
attracting prospective clients and tenants, particularly with the
enforcement of the new three-in-one traffic policy along Jl.
Sudirman.

"Our location at Menara Kadin on Jl. Kuningan is not within
the three-in-one zone. Nowadays, more and more companies want to
avoid Jl. Sudirman due to this traffic regulation," Lena said.

With the Indonesian political situation still uncertain with
the upcoming elections, more investors prefer to adopt a
wait-and-see attitude.

For investors who don't need large staff but still have to
maintain a presence in the country, taking advantage of a
serviced office might be the right choice for them.