2016 is great time for finding office in Jakarta since the demand for office space in the Indonesian capital Jakarta has been outpacing demand.
The vacancy rate for Jakarta office market rose from 4.8% in 2014 to 8.4% in June 2015. For grade A office spaces the change has been even more dramatic – it rose from 6.4 percent at the end of 2014 to 17.1 percent by the middle of 2015. (source)
This means that as a potential tenant you have more negotiation power than in the past and with the help of a great agent you can get a very solid deal.
Since Indosight helps our clients find and fit out offices we have a lot of first-hand experience we wish to share with anyone that is about to go through the process of finding office in Jakarta.
Office types available in Jakarta
Indonesia Business Insight (2016) claimed that a global drop in commodity prices is what caused a swell to Jakarta’s office market. By the end of 2015, some companies downsized their operations in Indonesia and caused an additional of 567,000 m2 of previously occupied office space in Jakarta.
The table below provides some explanations for the types of office space, from Grade A to Grade C in Jakarta to help you identify what kind of office space best suits to your needs.
Also, since office buildings found in Jakarta CBD are usually Grade A to Grade C class, and so a short overview of an office market in Q1 2016 for Grade A to Grade C in Jakarta will be provided after the table below.
|Description||Typical m2 rates in USD||
|Most prestigious office buildings in Jakarta. Preferred by large and multinational companies and/or companies that want to be located in premium offices and areas. Buildings located in the SCBD area mostly are Grade A’s. These buildings tend to have exclusive locations, amenities and facilities that support the operations of the buildings. The quality of the building itself tend to portray the Grade A status.||
± $27 to $54
|These are the mid range office buildings, with locations around Satrio and Mega Kuningan for example- similar to Grade A buildings. Although the Grade B is considered lower, they are very up to international standards.||
± $30 to $27
|The lower range office buildings. They can basically be located in almost all locations in Jakarta except SCBD. They tend to be spread out to Mampang, Tebet, Mas Mansyur, and basically all of Jakarta.||
Serviced and virtual offices
|Virtual offices provide a registered address and usually a list of other services such as dedicated phone number (with call forwarding), mail handling, opportunity to rent meeting rooms etc.
Serviced offices provide fully fitted work spaces with usually shared facilities. Tenants only need to bring their laptops as everything is already there in terms of desks, internet connection, etc. While the price per m2 is high, they allow also short term contracts, take the hassle away from the tenant and they are usually located in prestigious office buildings.
|Rukos abroad are typically called as shop houses, shop lots, etc. Although this option is cheaper than others, the disadvantage would be that the companies must spend more in maintaining it. They are popular among trading companies and allow to accommodate a lot of staff.||$307 to $10,500|
How to get best deals for office spaces in Jakarta
The best way to get a good deal for your next office is to use a property consultant such as provided by Indosight. There are several reasons for it:
- We are constantly in contact with office buildings and have an overview of the vacancies and good deals available.
- As long as you brief us about your needs, our property agent will save a lot of your time by taking you to see only the offices that match your budget and other needs.
- Due to good relations with the building managements and overview of the market rates, we will get you the best possible deal for the office.
To begin with, we only need the client to brief us about their office needs- area, size of the office, budget, and other aspects that they find important.
Then, our property agent will get back to you with a list of potential office buildings and will arrange a schedule to go and see them with you.
Once you find an office you want to rent or buy, our property agent will negotiate the best deal for you. Since the supply is currently bigger than demand and there are a lot of vacancies, the final price can be significantly lower than what is publicly offered.
After the price has been agreed and security deposit has been made, our property agent will help you with the fitting out process, continued by the Lease Agreement and all the submission requirements until you officially become the tenant of the building.
If the reasons above didn’t convince you then note that the service is free of charge for Indosight clients.
Choosing location for the office
In any city choosing right location for your office is important. However, in Jakarta where the traffic can turn a 5-kilometer trip into a 60-90 minute journey choosing the most suitable area for your business is essential.
Price for renting office spaces in each areas of Jakarta will be different, ensuing by the surrounding of the site.
Our property agent asserted that most of his clients tend to have a mid-range budget of approximately IDR 200,000 (USD$15) to IDR 300,000 (USD$23) /m2. Office space recommended for this price will be around Kuningan, Thamrin and Senayan area where it is also nearby the Central Business District. After the business have been established and doing well, they normally will relocate to a better building with a budget ranging from IDR 500,000,000 (USD$38,461) up to IDR 2,000,000,000 (USD$153,846) annually.
By learning about doing business in Indonesia, you will get some insights in choosing location for your office.
What to prioritize when choosing location
The two most common factors companies consider are the location and the price. Usually the service sector companies prioritise more premium locations which come at higher costs while other companies prioritise lower cost and/or the infrastructure around it (such as access to airport, sea port, toll roads).
Another factor companies consider is the access to public transportation. Since large part of the workforce commutes to Jakarta from the surrounding suburbs it’s easier to hire staff if they can access the office building using TransJakarta busway system since it cuts down their commute time.
When choosing office locations based on the price make sure to fully understand the final price you are going to pay. The price usually consists of base rent (which can be negotiated) and service charge (electricity, security, shared facilities). Different office buildings bundle the costs differently so keep an eye on what’s included.
Most of the office buildings charge the the rent based on gross size of the office, meaning you will not pay rent just for the office space you use but also for some of the surrounding facilities.
Most popular areas in Jakarta for foreign companies
Areas nearby Jakarta’s Central Business District (CBD), such as Sudirman, Gatot Subroto, Rasuna Said, Mega Kuningan, Satrio, Thamrin, and SCBD would be the most popular areas in Jakarta for foreign companies, largely because it is where business and commerce is located. It’s also where you find most of the foreign embassies and hotels.
If you look for offices with cheaper rent but that are still close to the aforementioned areas, look for Mampang or Tebet.
Mining companies tend to choose non-CBD areas such as TB Simatupang for cheaper rental price and Hak Milik title.
Office interior fit out and maintenance
|Given a bare shell space with tenant do the entire investment on interiors. In some cases, internal office flooring and toilets may be provided|
Extended bare or warm-shell
|Bare shell space with add-ons like DG backup and air-conditioning facilities|
|A fully furnished space, following tenant’s preferences|
A furnished space with older fit outs bought by them or previous tenants
Some landlords require you to purchase the partitions and other interior items that were left by the previous tenant. Make sure to ask about it if you check offices that already have some existing fit out.Most of the offices, especially in new office buildings, come in bare conditions.
Typical fit-out standards
The standard leased office spaces will get a screed finished concrete floor, demising partitions and a fully integrated suspended ceiling acoustic with lighting boxes, sprinklers and air-conditioning ducting.
Grade A and B office fit-out usually needs higher budget as they usually require higher standards of interiors and fit out.
All fit out costs are the responsibility of the Tenants, but a fit out period of 1 to 3 months is typical during which the Gross Rent payment is waived. Before fitting out, Landlords usually share a Fit out Cost review for Tenants to approve. Tenants will then be required to pay a Fit out Deposit to cover against any damages on the common area.
A typical fit out of 250 to 500 m2 space would usually require 30 to 45 days, excluding design and securing of government permits).
Finding an interior design contractor
Unless you want to roll up your sleeves and fit out the office yourself you will need to find a contractor that can set up the office based on your brief. Choosing the right contractor is very important as it will determine your work conditions for the next few years and good contractors make the process of setting up an office much less time consuming.
Usually, clients need to inform budget prepared for the fit out itself, followed by the requirements such as how many meeting rooms, director’s room, manager rooms, server room (if needed), pantry, reception area, breakout area, storage, how many people are going to be working in the office, what type of flooring, what type of partition, concept of the office, requirement for type of desks, chairs, roller blinds, backdrops, drop ceilings (if required), fingerprint access doors, and et cetera.
While there are a lot of interior design contractors in Jakarta available, it’s not easy to pick one that fits your quality and budget requirements.
It’s not uncommon to end up with a contractor that will promise a lower price but who will then use cheaper materials than agreed or will not finish the work on time.
Therefore at Indosight we work with a small amount of interior design contractors that we have previous experience with and can trust to do work for our clients. The process of working with a contractor is as following:
- Three of us (you, Indosight, contractor) will meet and you will share us your expectations – budget, style of the office, what should be included etc.
- Contractor will put together a floor plan and budget and present it to you
- Based on your feedback contractor will adjust the plan and budget and once agreed will start to work.
- Indosight will facilitate the communication and make sure that both the plan and budget are followed.
IT and Telecoms
Typically, buildings already have appointed providers for the telephones within the building.
The building itself usually provides a line up to the unit, but if clients needed internal extra networking, they will be charged extra accordingly. If they need simultaneous calls, they would surely need a PABX system installed.
As for the Internet providers, some buildings appoint a single provider, but many buildings have several providers for tenants to choose from. Be careful when the building has only one internet provider, especially if it’s not one of the big providers – you might be stuck with a very poor internet service at a high cost.
Overview of commercial property market
Demand for office space during the first quarter of 2016 has weakened as a result of slower business growth in 2015.
The tendency of decreasing rental rates continued, with the end of March 2016 the average gross rental in Rupiah terms occupied at IDR 320,600/ m2 monthly, a decrease of 7.2% quarter-on-quarter. In US Dollar terms, it abided by $24.34/ m2 monthly, a decrease of 4.0% quarter-on-quarter.
Taking advantage of the declining rent, many tenants are actively seeking better quality buildings, business establishments and relocations.
Grade A buildings continues to compromise the largest net take-up during the Q1, meanwhile Grade C experienced a negative take-up due to major relocations of tenants in a few buildings that are under preparation for development.
The projected new supply over the remaining 2016 will result in further increase of the vacancy rate and a further decline in the average base rental, particularly in Grade A buildings.
Ready for finding office in Jakarta? Here are the important aspects to think about before getting started.
Let’s summarize the key aspects of finding office in Jakarta:
In general, it’s typical to have 70 square feet per person. You know your business best, but to avoid making a mistake of renting an office space, it is crucial to have an agent to lead you in getting a comfortable working environment that will be conducive to productivity in the office.
It is important to keep your clients and staff happy.
Pick your location not only according to where most of the businesses and trading take place, but also the security of the neighbourhood and what is close to the office.
Companies most likely at some point will reach a point when they think restructuring is required.
If you already have an office space and would like to relocate or make changes in your business activities, you can contact Indosight and let us know what you need to get done.
It is the most important factor to most businesses when choosing a new office space.
Make sure you are getting the best deal possible by finding out if your office priced is in line with other similar office spaces in the area you chose.
Don’t spend too little or excessively with an office, as neither of those are ideal. Spending overly less would end up making you unhappy and caused you to move out after a few months. Passing over the budget limit might create a struggle for you to pay the rent or forcing you to downsize the business.
Knowing your affordability to pay a three months rent deposit and all the hidden costs like maintenance fee, extra parking cost, et cetera are very important in finding an office space.
- Interior design
Having a well designed office will help you to build trust with clients and also hire and keep good employees. Not to mention that as a business owner yourself you might be spending a considerable part of your days in that environment.
Let Indosight help you find the best office location and interior contractor for your business. It will save you time, money and will give you a peace of mind that you will be having an office that meets your expectations.
If you wish to use Indosight services today to help you find an office space as according to your preferences and budget. Just contact our consultants at [email protected] or fill the form below and we will get in touch!