I go to malls on a weekly basis, maybe less often these days but the malls I like to go, for example, 1 Utama, MidValley and Sunway Pyramid are far from being empty. I do think it’s still not at the pre COVID-19 levels though. This brings me to the article today which I have to write because there continue to be some property media writers who write mall articles and I think they have NEVER been to malls. By the way, if your editor was the one who asked you to write such articles, then your editor must have been staying at home all the time too.
Let’s just look at the latest Supply and Occupancy chart from NAPIC released just days ago. One glance and everyone must be thinking OH NO… indeed the occupancy is dropping like crazy!
Supply has been rising
First of all, the supply has been rising throughout the years. From 2016 to 2020, the supply has been rising and rising and rising. From 14.72 million s.m, this has risen to 16.85 million s.m. Look closely and we should also realise that the occupancy is also rising when we compare 2016 to 2020. Number wise, the supply side rose by 2.13 million s.m and the occupancy rose by 1.1 million s.m What this actually tells us is that the demand has risen SLOWER than the SUPPLY.
2020 was a bad year, remember?
I hope everyone realise that 2020 is indeed an exceptional year as well… and occupancy should drop in 2020 unless Malaysia is some sort of a special country versus the world which are all affected by COVID-19 lockdowns and restrictions. Thus, the occupied space dropped from 13.09 s.m in 2019 to 13.06 s.m to 2020. Look closely in case you did not see the negative change. There are two things which could have happened, these tenants managed to hang on… or the tenants who were forced to close (assuming there’s a huge load of them), the space they moved out were quickly taken over by new tenants.
Malls are NOT closing down (especially the better ones)
Let’s look at average number then. If we own a mall and our occupancy is 77.5% in 2020, would we like to say that our mall is about to close down? What the average number is telling us is that there are malls which are struggling and there are malls which are not going to survive another year but there are also malls where the occupancy is high enough that the tenants better not move out or they will lose that retail lot for a very long time.
From what I understand at 1 Utama for example, renovations are continuing in anticipation of full recovery in the near future and even that food court which was closed down already have a new brand opening up soon. This evening, I was at Ippudo (it’s Wednesday night by the way) and Ippudo was full house… As for the restaurants which did not have half their tables filled, that’s more of the restaurant issue and not a lack of visitors issue.
Show you my Ippudo Ramen. (Note: Non Halal)
When we open a restaurant and the food is not good, why do we blame other restaurants or even to start telling people that everyone is eating at home and no longer come out to restaurants? This is the same as malls. When some malls are NOT doing well, why is the first blame going to the market condition and the second blame goes to the online shopping? It is just the malls themselves. Happy understanding and stop believing writers who write about malls but seldom goes to the mall or the writer happens to prefer online shopping…
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