State of the Occupier - Jakarta: Reopening in June

Most occupiers are working from home and not currently active in the market. The governor of Jakarta has issued a recommendation to work from home, which has been adopted almost universally. As of the time of this writing, the federal government has not implemented any enforceable directives to stay home. The Indonesian gov’t issued an instruction to close all businesses on the 9 April for 14 days expect those “deemed essential” including medical, food supply, energy, water supply, communications, banking, logistics, street vendors & strategic industrial. This instruction which was previously extended has now been extended further to 4 June. In addition to this ban, the gov’t is encouraging everyone to remain in doors as a part of a social distancing initiative.

We are receiving some tenant rep requests, mainly from Chinese firms, though we are increasingly having a hard time arranging tours and inspections as landlords are requesting they be delayed. 

OCCUPIERS?
Occupiers are primarily focusing on the welfare of their employees. Most transactions that were already underway are proceeding, though we are seeing more delayed or cancelled. Any requirements moving forward are being handled remotely. Occupiers are requesting reductions in rent, and most are expecting these requests to be approved. 

While the office market remains depressed, we are witnessing continued activity with increased interest from US and Chinese manufacturers seeking too establish facilities in the Indonesian industrial sector. This is apart of a regional trend of refocusing manufacturing operations in countries peripheral to China.


LANDLORDS?
Landlords are open to discussing rent reductions albeit this interest is seen primarily in the retail sector while office tenants are not being granted such terms. One of the reasons why landlords are not so receptive to these requests is that they have little wiggle room given the soft market conditions that existed prior to the spread of the pandemic.


DEVELOPERS / INVESTORS
Developers are delaying their projects over the next 6 to 12 months based on the lack of available construction workers and reduced demand induced by COVID. This constraint are on top of the pre-existing challenges which existed prior to COVID. Developers are, however, continuing to market their properties. Investors are looking for opportunities to invest in distressed properties.

Occupiers can re-visit their workplace strategies and consider implementing or increasing their work-from-home strategies. We’re seeing this now, primarily from start-up companies in the tech sector. Serviced Office and Co-working providers have been quite aggressive in providing immediate office solutions to businesses needing to accommodate split teams, as well as 24-hour access to facilitate split shifts. Whether or not this will be an appealing opportunity for occupiers is yet to be seen, however, does present an alternative business continuity plan solution.

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