Various tenants are relocating to higher-grade buildings

• Positive net demand was recorded at almost 15,000 sqm by the end of 2022. The largest-recorded company in the technology sector relocated from a Grade B to a Grade A office building.
• In total, around 27,000 sqm of net demand was captured in 2022, a slight improvement compared to 2021, with flight-to-quality, consolidation and relocation as central themes, driven by cost savings.

Thamrin Nine 1 (Autograph Tower) at 94,000 sqm enters the market

• One new completion was added in 4Q22, Thamrin Nine Tower 1 (Autograph), with a total area of 94,000 sqm. It was the second building completed in the CBD area for the whole of 2022 and pushed up the total stock of Grade A office buildings to almost 3.6 million sqm.
• Mori Building and Thamrin Nine Tower 2 (Luminary) completions are postponed from 2022 to 2023. The Mori Building, at around 90,000 sqm, is located in the Sudirman area, while the second tower of Thamrin Nine, at around 40,000 sqm, is close to the first tower.

Rents continue falling in 4Q22

• Rents declined by -1.8% q-o-q and around -9% for 2022, due to limited demand and suppressed occupancy.
• Despite recovery from the COVID-19 outbreak, landlords of office buildings with low occupancy are still expected to offer competitive prices and flexible terms to capture potential tenants.

Outlook: Market pressure and downsizing trends are likely to remain

• Vacancy rates are likely to increase in the next 12 months due to an additional 130,000 sqm of upcoming supply, limited demand, as well as the continued downsizing trend. With this ongoing situation, rents are expected to be under pressure.
• For 2023, although social restrictions have already been lifted, global uncertainty is anticipated to impact office demand as cost-saving strategies continue. New workplace strategies like hybrid working are another factor that will likely impact demand. Flight-to-quality and sustainability will remain the themes for MNCs.