Office and Retail MarketBeat Reports

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Cushman & Wakefield MarketBeat reports analyze quarterly economic and commercial real estate activity including supply, demand and pricing trends at the market and submarket levels.

OFFICE Q2 2020

“Any consideration to reduce office space requirements will need to be balanced against the need for safe management protocols in the workplace. Corporate occupiers in Grade A CBD buildings will probably negotiate for rental reductions in the first instance before deciding on reducing footprint in light of social distancing measures at the workplace,” Nonny Subeno, Executive Director, Commercial.

But there is now a window of opportunity for some corporate occupiers to consider a Grade A office location given the continuing over supply situation and downwards pressure on rentals,” she added.



Only the second new office project of the year, namely Lippo Thamrin of 22,500 sqm, entered the CBD office market during the second quarter of 2020.

Total expected new supply due for completion within 2020 was adjusted downwards to 237,000 sqm (from the previous forecast of 320,000 sqm) as delays to several under construction projects continue due to the ongoing Covid-19 crisis.


Office leasing activity virtually ‘flatlined’ during April to June 2020, with the worsening COVID-19 outbreak and the reduced office operations & travel restrictions imposed in Jakarta.

Almost all buildings experienced zero new transactions in April and May, though some improvement started to be seen in June with more inquiries for small space (below 200 sqm) and an increase in building inspections, as some of the office operation restrictions were eased. New lease contracts remained very limited, save for one notable deal completion by a services company in excess of 10,000 sqm.

For the first time since the Asian financial crisis in 1999, overall take-up of negative 44,300 sqm was recorded during the second quarter 2020, bringing the YTD net take up to a negative 12,700 sqm. Some downsizing, relocations and even office closures were seen in certain Grade B and C buildings, although positive net take-up was still recorded in the Grade-A sector.

Overall the Jakarta CBD office occupancy (all grades) by the end of June 2020 decreased to 74.2%, with Grade B offices experiencing the sharpest drop in occupancy during the quarter of 5.3% to reach 70.7%.


Base rentals in Rupiah-terms decreased by 5.5% QoQ to IDR 198,900 per sqm per month, whilst in US Dollar equivalent, they showed an increase of 8.1% due to the significant strengthening of the Rupiah (by +14.4%) during the quarter.

Many tenants sought rental discounts or abatements due to the slowdown in business activities and with continued high vacancy levels, some landlords were prepared to granted rent reductions ranging from 10% to 50% to their tenants hardest hit by the Covid-19 outbreak, especially to supporting F&B retailers within their buildings.

With the outlook for lower economic growth due to the impact of the pandemic, a trend towards lower office cost locations, premises downsizing and even some closures within the CBD office market is to be expected in the coming quarters.

Similarly, gross rental rates are projected to further decrease with the weak demand. Landlords are likely to face more challenges as office occupiers struggle to pay occupancy costs and push for payment delays or service charge & rental suspensions or discounts. Major ‘pipeline’ relocations and expansion plans will also likely be put on hold.

RETAIL Q2 2020

“Limited retail pipeline supply will help landlords defend retail rents for the rest of the year. Some retail brands might take the opportunity to explore prime retail locations for post-Covid future expansion, but what is clear is that retailers should enhance their omni channel strategies, leveraging technology including virtual sales tools to engage customers, as this continues to accelerate as a major mode of transaction for consumers, particularly the technologically savvy, younger consumers,” Lini Djafar, Executive Director, Retail.


At the beginning of June, the government started to ease the large-scale social restrictions (“PSBB”) which had been implemented to limit the spread of Covid-19.

Under this “Transitional PSBB” period retail centers in Jakarta were permitted to re-open gradually from June 15, with the application of strict health protocols, including limiting the overall number of visitors. Leisure-related retailers such as cinemas, fitness centres, karaoke bars, childrens’ playgrounds and other types of operators considered higher risk for Covid-19 transmission, remained under review for reopened in subsequent phases of the PSBB easing.

New supply from projects such as Green Sedayu Mall and Senayan Park (which were initially scheduled to open in the first quarter of 2020), are now only expected to enter the Jakarta market by the third quarter. No new supply was seen for the first six months of the year and some projects planned for opening in 2020, have already been postponed to 2021.


Perhaps not surprisingly, the 3-month temporary closure of malls had a profound impact on retailers, with those smaller retailers unable to survive having turned their temporary closures into permanent ones.

This brought down the overall occupancy rate of the market by 79.5%, down 1.3% from the first quarter. Adding to this, with malls continuing to experience limited ‘footfall’, other retailers have sought to extend their fit-out period or postpone their fit-out indefinitely in the near-term, which put further pressure on occupancy levels during the review quarter.

Since the onset of the pandemic, enquiries for retail space have declined considerably, however some retailers continue to express optimism that business recovery will take place in 2021 and as such continue to seek new location for their business expansion for the year ahead.

Looking to the future, it is expected that retailers will also be more focused on accelerating the integration of their online and offline sales to maintain and even grow their business during the ongoing pandemic.


Despite this fall in demand, average rental and service charge levels remained unchanged within the Jakarta retail market on a QoQ basis, at Rp807,700 per sqm per month (sqm/mo) for specialty retail space on ground floor and Rp190,400/sqm/mo respectively.

Some mall landlords were prepared to review individual tenant’s pandemic-circumstances on a case-by-case basis, with those ‘essential’ retailers (whose business has remained robust during the pandemic) still expected to pay rents in accordance with their agreed contracts, whilst those tenants hit hardest, being granted rental abatement or an agreed payment deferment.

This situation of expected to remain the same over the remainder of 2020 whilst the pandemic conditions continue.

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 53,000 employees in 400 offices and 60 countries. In 2019, the firm had revenue of $8.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services.

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