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Tech players replace energy firms in CBDs
Indonesia’s internet economy is booming and many of its players are setting up offices in one of the country’s most expensive areas: the central business district (CBD) in Jakarta
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span>Indonesia’s internet economy is booming and many of its players are setting up offices in one of the country’s most expensive areas: the central business district (CBD) in Jakarta.
Jones Lang LaSalle (JLL), a property research firm, said in a report that 55 percent of the leased office spaces in CBD in the first quarter of 2019 were used by technology companies and coworking spaces, which house technology start-ups.
“Financial companies, banks and insurance providers have dominated CBD office spaces since long ago, followed by oil and gas companies then other service companies,” JLL Indonesia advisory head Vivin Harsanto told The Jakarta Post in a text message.
“[However] there are [many] oil and gas companies that have consolidated, contracted and moved to non-CBD areas.”
CBD is a triangular piece of land covering 18.5 square kilometers. Its vertices are near the Thamrin roundabout in Central Jakarta, Senayan roundabout and Dirgantara monument in Pancoran, South Jakarta.
The Energy and Mineral Resources Ministry recorded at least five foreign oil and gas companies moved out of Indonesia from 2013 to 2015.
The companies, which are Hess Corporation, Anadarko, Talisman Energy, Murphy Oil and Marathon Oil, pulled out due to low global oil prices and unfavorable local regulations, among other reasons. Hess, Andarko and
Talisman Energy all had offices in CBD.
JLL data shows that overall CBD office space occupancy rates have been steadily slipping since 2015. Rates fell from over 90 percent in the first quarter of 2015 to 76 percent in the same period this year.
Despite low occupancy rates, JLL researcher James Taylor noted that, “Last year, there was much expansion [into CBD] from global players. In the first quarter of 2019, local companies started to emerge.”
A case in point, tech behemoth Google moved last year into a larger office in CBD while Amazon Web Services (AWS) — a cloud service subsidiary of behemoth Amazon — opened its first Indonesian consultancy office in the district during the same period.
Meanwhile, the expansion of coworking spaces such as CoHive, WeWork, Regus, GoWork and Kolega into CBD greatly facilitated the entrance of local start-ups into the area.
Coworking spaces are popular among start-ups as they offer customizable spaces and flexible lease agreements in strategic locations. In fact, according to JLL data, 86 percent of coworking spaces and serviced offices in Jakarta are located within CBD.
“[Start-ups] are not bound by long-term contracts [...],” said Vivin, adding that total leased office space in the first quarter of this year reached around 94,000 square meters.
Interestingly, Tokopedia is the only one of the four Indonesian unicorns with a headquarters located within CBD. Ride-hailing giant Go-Jek, e-marketplace Bukalapak and online travel agent Traveloka are all located outside the district.
JLL recorded 47 companies operating coworking spaces in Jakarta, the biggest four of which are CoHive, which makes up 26 percent of the market, followed by WeWork (14 percent), Regus (11 percent) and GoWork (10 percent).
Other companies include UnionSpace, The Executive Centre, Marquee, Kolega, JustCo and CEO Suite, each of which hold 4 percent of the market or less.
Kolega cofounder Rafi R. Hiramsyah told the Post that low occupancy rates in CBD meant there were “many opportunities” for coworking companies in Indonesia, especially as he expected continual growth in the local start-up industry.
His coworking company had a combined 10 branches in Jakarta and Bandung as of last year with plans to open at least 20 new locations this year.
