JBN Session on 14th September 2017 at Stellar Room, Hotel Pullman Thamrin, Jakarta

1. Offices of the Future
market trends
1

2. he world is changing fast, often faster
than we realise. Technology and innovation
has transformed the way
Twe do business. It is to no surprise that the
Internet of Things (IoT) will change our
workplaces and offices in the future.
K E Y I N S I G H T
The number of start-up companies in
Indonesia is projected to grow 6.5 times
to reach a figure of 13,000
companies by 2020. Assuming that each business
consists of 5 employees requiring 15 sqm each,
around one million sqm of office space will be
needed by these businesses by 2020.
that a ‘one size fits all’ basis for offices shall become
ineffective. Developers and investors should explore
into the office trends of tomorrow: co-working
centres, serviced offices, small office home office
(SOHO) and activity based workplaces.
As our workspace become increasingly
multigenerational and the scale of
enterprises diverge, we argue
Jakarta appears to have started the
adoption of these trends, as we record
about 18,000 sqm of co-working
centres, 30,000 sqm of serviced offices and 200,000
sqm of SOHO-type offices. It is anticipated that all of
this combined will not be enough to accommodate
the growing level of demand until 2020.
The operators of these types of offices
should be regarded as a new class of
tenants that may possibly occupy
different types of property. Developers and investors
should also account for these trends with possible
alternatives to stand out in Jakarta’s weakening office
market.
2

3. The Disruptive Forces
 Workspaces are becoming more multi-generational. The millennial
generation is rapidly expanding and now they make up the largest
proportion of today’s modern workers.
 Unlike their Baby Boomer & Gen-X predecessors, they are known
for their affinity with technology and strong desire for flexibility and
work-life balance.
 Being the most educated of the generations, they also realise the
importance of being recognised in their ability to excel and
progress well in their professional career paths. It is also arguable
that they expect the companies they work for to offer regular
feedback within a conducive working environment that allows them
to thrive and continuously learn.
 Supported by their inclination for collaboration, peer engagement
and work-life balance, we can expect their ideal workplace to go
beyond the typical desk cubicles of yesterday.
 Studies from various institutions including Millennial Branding and
Identified have also indicated that the millennial generation are
more entrepreneurial than ever.
 Executive job titles in multinational companies no longer excite
most of them, as they wish to pursue careers as business-owners
and entrepreneurs.
With this in mind,
we can also
expect small
businesses and
start-ups to
exponentially
grow in the years
to come.
3

4. 4
600,000 400,000 200,000 0 200,000 400,000 600,000
20-24
25-29
30-34
35-39
40-44
45-49
50-54
Male Female
Jakarta’s population by age group, 2015
Source: Badan Pusat Statistik
As shown in the above figure, Jakarta’s
population profile is predominantly made up of
those that fall within the 25-34 age group. This
group refers to those that were born between
1980 and 1990, classifying them as millennials.
As their predecessors mature and soon retire, we
can expect these millennials to further dominate
the workforce along with a new breed of
generation which has just recently entered the
workforce, namely Generation Z.
From London to Hong Kong, Paris to Jakarta, we are
currently seeing a widening gap in the scale between
the businesses that define themselves as “large and
corporate” and those that are “small and starting-up”. It
is significant to note that with today’s technology,
opening businesses and reaching-out to customers has
become relatively easier than decades ago.

5. 5
According to US-based research institution
CHGR5, the number of start-up companies in
Indonesia is projected to grow by…
6.5x
to reach 13,000 companies by 2020.
A Majority of these businesses are from
the technology industry, with key sub
sectors in: Financial Technology,
Software as a service, e-commerce
Rising disparities in the
scale of enterprises
Financial
Technology
Software as a
Service E-commerce
A start-up business
generally employs around 5
employees
assuming that each
employee will
need 15 sqm of office
space,
One million sqm
of office space
will be needed by
2020

6. 6
Offices of
The Future
 Co-working Centre
 Serviced Office
 Small Office Home Office
(SOHO)
 Activity-based Workplace (Hot-
Desking)

7. 7
Co-working Centre
0
5000
10000
15000
20000
25000
2012 2013 2014 2015 2016 2017
South Jakarta Central Jakarta West Jakarta
North Jakarta Forecast
Cumulative supply of co-working offices
(sqm) in Jakarta
Source: Savills Research & Consultancy
Average occupancy
rate for co-working
centres in Jakarta
80%
Estimated proportion of co-working
centre users
SMEs & Startups
Freelancers
Students
Others
45%
30%
10%
15%
Source: Savills Research & Consultancy
In Jakarta, the co-working trend started in 2012, with
Estubizi Kuningan, Ciputra GEPI Incubator and
Freeware Spaces being three of the first centres to
introduce the co-working concept to Jakarta. Since
then, the number has been gradually increasing to
reach over 25 centres occupying approximately 18,000
sqm in the first quarter of 2017. Of this figure, about
60% are located in South Jakarta, an area well known
for its younger working population.

8. Serviced Offices
Serviced office in Menara BCA, operated by Regus
9%
78%
3%
10%
Central Jakarta South Jakarta North Jakarta West Jakarta
Proportion of serviced offices in Jakarta by location
(units)
Source: Savills Research & Consultancy
As of the first quarter of 2017, there are over 65
serviced offices occupying around 30,000 sqm of office
space across Jakarta. A significant majority (78%) of
these offices are located in South Jakarta.

9. Small Office Home Office (SOHO)
0
50000
100000
150000
200000
250000
2015 2016 2017
West Jakarta Central Jakarta South Jakarta (Forecast)
Cumulative supply of SOHO type offices Jakarta (sqm)
Source: Savills Research & Consultancy
By the end of 2017, we can expect the total supply
footprint in Jakarta to be about 200,000 sqm, more
than double the level of supply the market had in 2015.
Upcoming Project : Quo Space, Fatmawati
Completion : 2019

10. Activity-based Workplace (Hot-
Desking)
Activity based workplace concept in Macquarie Bank, Sydney
The purpose of this workplace strategy is to
essentially capture the expectations of the
millennial generation for flexibility and
collaboration needs, as well as to attract the best
possible talent in the market. Such strategies also
help in defining the company’s brand, retaining
employees and minimizing employee turnover.
The concept itself is based on the notion of rather
than assigning a specific workstation for each
employee, predetermined activity areas will be
available for employees to individually select
accordingly to their assigned tasks.

11. Implications
for the
Property
Market
After reflecting on this issue, we believe that the
implications for the property market can be seen from
various perspectives. First is that the operators of the co-
working centres can be an emerging new class of tenants
and secondly, developers or investors can adapt to such
new trends as one of their strategies to stand out in a
weakening office market.
An opportunity to
outperform in the weak
market
As office rents in the market
remain under strong
pressure and vacancies
continue to increase, the
market is currently indicating
that the tenant demand for
offices in Jakarta appears
unable to match the recent
surge of new supply. Such
trends are expected to
remain as we will continue to
see a large volume of
incoming development
pipeline over the next 3-4
years.
“When seeking potential tenants, we
would encourage developers to build
connections with this new class of tenants
and engage them from the early
development cycle as they might possibly
be long term, valuable tenants.”
An emerging new class of tenants
Co-working centres, especially, should be
regarded as a new class of tenants that is
much more flexible in nature compared to
typical tenants. Instead of being limited to
occupy only one type of property, these
tenants may occupy various types of property,
including reconfigured landed houses,
standard offices and shopping centres.
“In the current competitive market, we
argue that it is important for property
players to identify and tap into
alternative opportunities that help them
differentiate their service offering and
stand out from the crowd.”
Anticipating future office demand growth
as successful start-up companies expand
“Identifying this trend has led us to argue
that office developers or investors should
seek to identify this expanding group of
start-up businesses that may potentially
be their future tenants in the medium
term.”