Jakarta industrial tenant mix still dominated by 3PLs | Real Estate Asia
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Jakarta industrial tenant mix still dominated by 3PLs

Warehouses with dual functionality were in demand.

In the second half of 2023, net absorption in Jakarta reached almost 200,000 sqm according to JLL, with a major concentration of new demand in the Bekasi and Cikarang areas. Third-party logistics (3PLs) remained dominant in the tenant mix.

“Strong competition among warehouse developers heightened in popular areas like Cikarang, where pricing and attractive payment strategies played a crucial role. Additionally, there was a growing demand for warehouses with dual functionality, serving as both warehouses and workshops,” the analyst said.

Here’s more from JLL:

In the second half of 2023, the market witnessed the entry of multiple projects, collectively adding over 150,000 sqm of new supply. Notable additions included SPIL, a prominent local player, a new building within LOGOS Metrolink, another project by Genesis, as well as Marunda Center and a BTS development for an e-commerce player, strategically distributed across various areas in Greater Jakarta.

The increase in new supply led to a decline in the vacancy rate, reaching as low as 9.8%. Further development is anticipated in diverse areas of Greater Jakarta, including Jakarta. New entrants are also expected to bring innovative developments to the market, incorporating sustainability, green building practices, and technology.

Landlords offer flexible leasing and payment terms to grab tenants

Net rents saw a modest increase of 2.18% compared to 1H23, and a 2.45% y-o-y growth. In response to intensifying competition, especially in areas like Cikarang, developers went the extra mile by offering extensive flexibility. This included accommodating potential tenants’ needs, providing retrofit options, as well as offering flexible payment terms and leasing periods.

To attract tenants, developers bundled commercial flexibility options in their payment packages. These included flexible payment terms, technical specifications, additional features like shelves, and utilising space for workshops, extra offices, and mezzanine areas. These offerings were presented as a comprehensive package, integrated with the base rental price, enhancing their appeal to tenants.

Outlook: Market to remain attractive with emerging source of demand

The rise of new tenant characteristics like electric vehicles, coupled with the increasing demand for efficiency and optimised space utilisation, is expected to have a significant impact on the market. This will likely drive the emergence of multi-storey building designs, new concepts, and sustainability-driven initiatives to cater to the changing needs of tenants.

Several toll road developments are currently underway, which will foster better accessibility and transportation links, aiming to enhance connectivity from the city centre to key destinations such as Soekarno-Hatta airport in the west, Tanjung Priok port in the north, the industrial estates in the east, and the southern region where the market is located.

Note: Jakarta Logistics & Industrial refers to the Greater Jakarta prime logistics market.


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