CBD office rates up more than 100% in 3 years

JAKARTA. The sharp increase in rental rates in the office buildings in the Central Business District (CBD) has forced many companies to relocate their offices to non-CBD areas such as TB Simatupang, which offer lower rates, a property consultant said.

“Many tenants in CBD have felt the pinch of increasing base rent since the end of 2011 because of land scarcity and limited supply in the area [of CBD] yet the demand keeps increasing every year. 

This is a blessing for other areas, particularly those with direct access to the CBD such as S. Parman, and MT Haryono as well as TB Simatupang,” Colliers International Indonesia office services director Bagus Adikusumo said in Jakarta on Tuesday.

Bagus said that average rental rates for office building space charged in US dollars rose by more than 100 percent to US$35 per sq meter in the first quarter of this year from just about $15 per sq meter in 2010. For the office buildings charged in rupiah, the rate rose by about 75 percent over the past three years, from Rp 97,000 ($9.99) per sq meter in 2010 to Rp 145,000 per sq meter at present. 

“The rental rates are projected to further move higher this year and next year. We are likely to see less growth [in the rental rates] in 2015 because the new annual supply will be high in that year,” he said. 

TB Simatupang has become a growing area for commercial activities over the past two years as it has a larger area to be developed compared to the crowded CBD. 

In addition to that, its average rental rates only grew around 30 percent from $13 per sq meter in 2010 to $18 per sq meter in the first quarter of 2013, attracting both long time and new players to expand their businesses in this area, he said. 

Colliers International Indonesia data also showed that in particular, new office stock in the CBD will be very limited throughout this year. 

The projected annual office space for 2013 will be 311,907 sq meters, far lower than the total annual supply for 2012, which was 547,070 sq meters, the largest annual supply since 1990. 

In the first quarter alone, there are only two buildings operating in this area, the Blue Green Office Boutique and the Prudential Center. 

However, he said that this did not mean the Jakarta office market has started to weaken because many companies decided to expand their businesses in 2011, pushing new supply to enter between 2014 
to 2016. 

Having reviewed the construction progress of office buildings scheduled for operation between 2014 and 2016 in the CBD and should developers commit with the delivery time, supply would strongly achieve a total of 1.63 million sq meters of new office space, research associate director Ferry Salanto said. 

Meanwhile, outside the CBD, there will be 840,557 sq meters of new office supply. Of this figure, 58 percent would be located along the Jalan TB Simatupang corridor, which affirms this area as the main contributor to the office supply outside the CBD. 

“Of the projected [840,557 sq meters] future office space, 61.1 percent has started construction. Again, this emphasizes that the area of new office space within the next three years will be substantial,” 
he went on.

(Nurfika Osman/The Jakarta Post)