An anticipated huge supply in 2020-2021 will likely heighten competition. Surabaya’s office market remains generally challenging for landlords, as rental tariff continues to depress. Landlords will be more focused on maintaining and improving occupancy performance. The situation is even tougher for buildings in non-prime locations. On the other front, tenants would benefit from quite a few options because there are more rooms to negotiate occupancy costs.
Amidst the downturn in the office market, we suggest landlords to seek tenants to commit and so reach occupancy level above 50%, ideally before construction work begins. By achieving the required occupancy level, the operational costs of construction will be covered and subsequently could secure a bargaining power position.