Co-working in Jakarta
Several months ago, I wrote a blog on the growing technology sector in Jakarta’s office market but this time I’m going to zoom in on the co-working sector. While immature in Indonesia, there is growing interest from both occupiers and developers. The market is currently dominated by small, local groups occupying space in Grade B and C offices in core areas of the city or standalone shop house type buildings in decentralised locations.
Over the past three years, unprecedented volumes of new supply have been completed in locations throughout Jakarta. Much of this supply has been of Grade A quality, occupancy levels have fallen and Grade A rents have declined in each quarter since 3Q15. More affordable rental levels in the some of the city’s best buildings may attract co-working firms and this represents an opportunity for some landlords to boost occupancy in a time of stiff competition.
Who’s driving co-working demand in Indonesia?
The demand profile also changed in 2017. Historically, the market has been dominated by oil, gas and mining firms as well as a broad cross section of typical CBD tenants – banks, insurance companies and professional service providers.
While these sectors were stable or expanded moderately in 2017, the strongest demand came from technology firms with online gaming companies, fintech firms and online retailers all expanding or entering Jakarta for the first time. These types of company, as well as local start-ups, are the main occupier types for co-working space in Jakarta.
Looking ahead in 2018, we expect continued growth from local co-working firms and some big global names are known to be planning to enter the market in the first half of the year. Many landlords are likely to look to tap into this demand source, especially given the continued expected growth from technology firms.
Additionally, looking beyond Jakarta, while the Bali market is primarily associated with the hospitality sector, some local co-working firms have and may continue to show an interest in the market due to the island’s large entrepreneurial community.