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.