Kuala Lumpur’s office market is expected to remain competitive over the next two years, with some 7.9 million sq ft of new office space scheduled to come onstream by 2014, creating pressure on landlords and owners of older buildings.
CH Williams Talhar & Wong Sdn Bhd managing director Foo Gee Jen is confident that the new supply of office space can be absorbed, especially buildings located within the KL central business district (CBD), but at the expense of older buildings.
“The 7.9 million sq ft of space can be taken up, but it would create a vacuum in the older buildings,” he told StarBiz.
Foo noted that newer buildings offered better floor-to-ceiling ratios compared with older ones, hence providing tenants with more space, comfort and improved facilities for information technology and food and beverage support and utilisation.
“With better facilities, many tenants will still prefer to move to newer buildings, even if the rental rates cost a little bit more,” he said.
Foo said there would be incoming supply of office space amounting to 4.1 million sq ft and 3.8 million sq ft by end-2013 and 2014, respectively, adding that the cumulative supply of office space in the Klang Valley totalled 92.36 million sq ft in the first half of 2013.
Office buildings that would be completed by end-2013 are Menara Dialog, Menara LGB, Menara TSR, Glomac Damansara, Menara Bank Rakyat, The Cascades, Menara Hap Seng 2, The Ascent and One Sentrum.
In the first half of the year, the occupancy rate in office buildings within the KL CBD actually improved by 3% to 4%. Our concern would be for buildings located outside the CBD area, such as those located within Kota Damansara, Subang Jaya and Petaling Jaya,” he said.
According to CH Williams Talhar & Wong’s 2013 Property Market Report, new buildings are expected to be well taken-up, but overall occupancy rate may slide slightly to 85% in 2013.
Knight Frank Malaysia managing director Sarkunan Subramaniam said despite the new office space coming into the market, only certain locations would experience a glut.
“Within the KL Sentral area, for instance, the supply is often more than usual, but because it is a transportation hub, occupancy is hardly a problem,” he said, adding that there could be a dip in rental rates next year due to the supply of new office space coming into the market.
According to Knight Frank’s KL Office Market and Trends report, the overall average achieved rent as at the first half of 2013 stood at RM5.97 per sq ft per month.
It said prime grade A and grade A+ buildings stood at RM6.29 per sq ft per month and RM9.34 per sq ft per month respectively.
Grade A buildings are defined by their technology and design.