RealEstat.id (Jakarta) – Some landlords have proactively reduced their published office rental rates. While negotiation processes will likely follow, landlords are now contemplating a reasonable gap between the asking and transacted rent.
In Quarterly Property Market Report Q4 2023, Colliers Indonesia mentioned that intense competition in Jakarta office sector is inevitable, especially in efforts to retain tenants whose contracts are nearing expiration.
On the flip side, some landlords are actively persuading prospective tenants to relocate to higher-quality buildings by presenting enticing rental packages.
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Ferry Salanto, Head of Research at Colliers Indonesia mentioned that in a bid to attract tenants, some landlords are even willing to cover initial costs, a significant consideration for tenants contemplating relocation.
“With substantial vacant spaces, including those in newly operating buildings, the bargaining power of tenants is undoubtedly stronger, allowing them to shape strategies and negotiate favourable terms for occupying office spaces in the coming years,” Ferry Salanto added.
The provision of semi-furnished spaces for lease has become an attractive option for prospective tenants aiming to minimize initial capital costs. The expenditure involved in the early stages can often be a hurdle, leading headquarters of tenants to withhold approval for leases.
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One of the strategies is landlords are offering amortization solutions by incorporating the calculation of initial costs into monthly rent payments throughout the lease period.
Therefore, according to Bagus Adikusumo, Head of Office Services at Colliers Indonesia, given the challenging conditions in the Jakarta office market in 2024, the key for landlords is to remain flexible and accommodating to tenant demands as long as they are still reasonable.
"On the other hand, owing to the current tenant market conditions, negotiations conducted by tenants should also remain reasonable and align with the market," he said.
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