An earlier article about the Kuala Lumpur offices occupancy is here: Occupancy at 85% but 75% over 16 years old. It has not changed a lot since then. Reported in The Sun Daily, Siva Shanker, the past president of the Malaysian Institute of Estate Agents shared that the current “tenants market” will continue because there are more additional office space completing by end 2016. Within just Kuala Lumpur and Selangor, there is a total of 92.7 million sq ft of purpose built office space with a further 5.8 million sq ft of supply on the way. These new office buildings include Public Mutual Tower, JKG Tower, Menara Ken and Menara Hong Leong. Occupancy rates of offices in Kuala Lumpur is now at 83 percent, falling from nearly 90 percent in second half of 2015.
He also shared that the new MRT line will help decentralised locations as it could be 20 – 30 percent cheaper. He cautioned however that rental reduction is not the answer to attracting tenants because with lower rents, there would be less money for maintenance. This may mean the office buildings would only attract lower quality tenants. He also shared this statement, “Many MNCs are not keen to come in and are willing to spend a little bit more to stay in Singapore while those staying here are those who are already invested here.”
MRT lines, with many new stations will change a lot of the current area dynamics. However, moving to these areas outside the city centre would also mean some staffs resigning as they may not be staying nearby. Just imagine if someone were to work in Damansara and staying in Puchong. Using LDP in the morning, say at 715am would really test his / her patience…. Perhaps driving into the city centre from either Damansara or Puchong may still make good sense.
Lower rents meant lower quality tenants may be quite true but for maintenance of older office buildings, it will be very hard to complete with newly completed modern looking office buildings. In fact ask any Gen-Y workforce today and we would notice that even the working place plays an important martin attracting them. Older offices will definitely keep many of them away, regardless of how awesome the maintenance is. Employers would have to keep this in mind when they are thinking of an office change.
As for MNCs shying away from Malaysia or staying in Singapore, I disagree with this statement because there are even more foreign outsource hubs being set up here in Malaysia and not lesser. This is despite some other neighbouring countries having lower labour costs. As for oil and gas companies, please do read a bit. Some are actually moving their hubs to Malaysia. Once moved and stabilised, moving back to higher cost countries would be a no-no. Let’s focus on attracting them here. Happy following.
written on 2 Nov 2016
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