New Atria offers potential upside
The sight of one of Petaling Jaya’s oldest malls, The Atria Shopping Centre, shut down and enclosed by zinc sheets no doubt evokes bitter-sweet feelings among its former tenants and regular visitors, and residents living nearby.
The 4-storey building in Damansara Jaya had survived for over a quarter of a century and featured a gross floor area of 294,683.5 sq ft, and a net lettable area of 208,400 sq ft, and shared its 5.7-acre plot of freehold land with two 3-storey covered car parks.
Owner OSK Property Holdings Bhd plans to replace the old mall with a RM1 billion development that will comprise a 5-storey retail podium beneath two 16-storey office towers.
The development will be known simply as Atria, and its components tentatively named Atria Shopping Gallery and Atria Towers.
“We are certainly going to use the ‘Atria’ name, but we are still working on the names of the components,” OSK Property senior public relations and communications executive Emily Cheng tells City & Country.
When completed, the podium will have 450,000 sq ft of retail space for lease and 1,830 parking bays housed in two levels of underground parking and five levels of multi-storey parking.
“With more parking, we hope there will be less double and triple parking in the area — that’s one way we can alleviate traffic congestion here,” says Cheng.
The retail podium will have a roof garden with water features and will be open to the public.
The group plans to retain the neighbourhood mall concept, although the development will feature a lot more food and beverage outlets that will take advantage of the al fresco concept of the retail compound.
“We are not actively talking to anchor tenants at the moment because it will take us six months to complete the demolition of the old building,” says Cheng.
Almost all the tenants, some of them part of the mall since the 1980s, have moved out except for The Language House. Work on the mall has not yet begun, although most of the property is closed.
It has been reported that the school has mounted a legal challenge against OSK Property on the grounds that notice to move out in three months was insufficient and the tenancy contract only provides for repair and renovation works, not redevelopment.
Meanwhile, Cheng says previous tenants of The Atria will have “privileges” in the selection of shoplots if they choose to return.
OSK Property is aiming for Green Building Index (GBI) certification for the two 16-storey towers above the retail podium. The towers will feature rainwater harvesting systems, improved ventilation and sun shade, among other energy-saving measures.
Tentatively, one tower will feature 100 units of designer office suites with floor space ranging from 597 to 4,846 sq ft. OSK Property plans to build four to 10 units per floor. In total, both towers will have 310,000 sq ft of gross floor space.
“We have not decided on the price, but we are looking at around RM700 psf,” says Cheng.
The other office tower will likely have 155,000 sq ft of gross floor area with floor plates ranging from 11,840 to 13,100 sq ft. The group plans to sell this office tower en bloc.
“We will try to make the connection between the mall and the public roads outside more seamless. What we aim to do is improve traffic flow within the mall compound, besides making it more pedestrian friendly.
“So for a bit of inconvenience during construction, there will be big rewards later. There will be a big upside for people in the area,” says Cheng.
OSK Property plans to further increase the number of parking bays by developing two hawker centres next to the development.
It has submitted proposals to Majlis Bandaraya Petaling Jaya (MBPJ) and is awaiting the council’s response to cooperation on developing the hawker centres.
The group also has not ruled out working with MBPJ to improve the roads leading into and around the area, says Cheng.
The new mall will feature a wider drop-off zone to expedite passenger pick-ups and drop-offs to reduce congestion, she adds.
The retail podium is expected to be completed by end-2013 while the towers will be completed by end-2014 or early 2015.
Old area with stable growth
Kim Realty Sdn Bhd CEO Vincent Ng says there are not usually a lot of transactions of the shopoffices surrounding the mall.
Google Maps satellite images show that there are almost 160 shopoffices divided into 16 rows surrounding The Atria Shopping Centre.
There was only one noteworthy transaction early this year where a 4-storey shopoffice with a built-up of 1,650 sq ft facing the thoroughfare was sold for RM2.6 million, says Ng. A similar unit was sold for RM2.2 million last year.
Ng identifies the row along Jalan SS22/19, where the post office is located, as the most sought after, followed by the row facing Jalan SS22/25, where his office is located.
He says the largest corner units with frontage of 26 ft have been valued at RM3.3 million to RM3.5 million, although he has no doubt that these units can fetch up to RM4 million.
“There aren’t a lot of units for sale here. The people who own the shopoffices usually own several units and occupy these buildings. Many use them as corporate offices. Investors also tend to keep the units for the long term. Of course, if they were offered over RM3 million, they will consider parting with the properties,” says Ng.
He pegs the appreciation of values at 20% over the past 12 months, but attributes the increase to the performance of the Klang Valley property market in general and not due to The Atria Shopping Centre’s redevelopment.
Rents range from RM3,000 to RM6,000, depending on location and levels. According to Ng, rents have been fairly stable over the years given the lack of development in the area.
However, DTZ Research director Brian Koh says shopoffice values in the area have risen by 10% over the past 12 months.
In February, a shopoffice with a built-up of 5,390 sq ft was sold for RM2.6 million. In comparison, two similarly sized units were sold last September for RM2.15 million each.
Koh agrees that transactions are limited, with only six to eight shops put up for sale last year. He attributes the growth in values to the anticipation of the redevelopment of the mall and the general property market trend.
Koh foresees minimal impact on the shopoffices from the mall’s redevelopment, save for ground floor units immediately facing the construction site. “But most of these are not for pure retail usage so impact will be more limited,” he says. He also does not expect a lot of owners to put these units up for sale as they would more likely adopt a wait-and-see approach.
Lower rents in short term
In the longer term, Ng believes that Atria, when completed, will add vibrancy to the area as the combination of designer suites and office space will increase traffic while the new parking bays will handle the surge in vehicles.
He compares the potential change to that in Damansara Jaya following the development of Damansara Uptown by See Hoy Chan Sdn Bhd. Damansara Uptown Phase 2, which is underway, will comprise two residential towers, an office tower, a 400,000 sq ft retail mall, a conference centre and 200 serviced apartments called Somerset that will be managed by The Ascott Ltd, a unit of CapitaLand. The project is expected to be completed by 2015.
“However, Damansara Jaya won’t be as vibrant as Damansara Utama, simply because it is not as big,” says Ng.
During the construction period, he expects the values and rents of shopoffices facing The Atria to decline. However, should OSK Property decide to enhance connectivity between the mall and the shopoffices, their values and rents may rise tremendously.
“It will be good news for the owners — they can tap into the vibrancy of the new mall,” Ng explains.
Koh expects shopoffice values in the area to be maintained and rents to dip slightly while work is underway. Units facing the construction site will likely suffer in the short term.
Koh also says values are expected to increase, although he declines to say by how much, while rents are expected to rebound upon the completion of The Atria and balance out any losses incurred during its construction.
The accidental shopping centre
Many would be familiar with the early days of The Atria Shopping Centre — in 1982, the mall started off as Gardenia Town Centre with Japanese retailer Kimisawa and French department store Printemps as its first tenants.
However, not many may know that developer See Hoy Chan Sdn Bhd did not originally plan for it to become a shopping mall.
“It was built as an entertainment centre, with a cinema and a gaming arcade. You could see it in the building’s design,” says Kim Realty Sdn Bhd CEO Vincent Ng.
“I don’t know why it [See Hoy Chan] changed its mind. It could be due to market forces. There was no shopping centre like it in the 1980s, before the time of 1 Utama and Mid Valley Megamall,” he tells City & Country.
The mall stood out from the myriad emporiums that dotted the country, thanks to its organisation where each tenant had an individual shoplot, in contrast with the more open-floor emporiums such as Thrifty in PJ State.
Kimisawa also helped reel in the crowds with its combination of supermarket and department stores, something unheard of then.
“[Kimisawa] was a very nice place and people would go there to pass the time. I guess it was new,” says Ng.
One of The Atria’s more colourful tenants was the Picadilly disco, which held afternoon tea dances and saw frequent fighting between rival teenage gangs at night.
Printemps targeted the city’s expatriate community, but it closed after operating for a few years, says Ng.
“Printemps sold imports but they weren’t as popular with local people as foreign goods are now,” he observes.
Kimisawa closed down a few years later, not for want of customers, but due to the 1987 global recession which put the Japanese chain’s local partner Selangor Emporium in financial trouble, says Ng.
Lion Group acquired the mall from See Hoy Chan after the 1998 global downturn and renamed it The Atria Shopping Centre while its subsidiary Parkson replaced Kimisawa as the anchor tenant and restored the lustre of the mall.
In 2001, Lien Hoe bought the mall from Lion Group for RM51.46 million, making it one of the former’s flagship properties along with Hotel Armada in Petaling Jaya and Plaza Lien Hoe.
A local source says Parkson asked Lien Hoe to refurbish the mall, but it lacked the funds to do so.
Lien Hoe did concede that it lacked the resources to refurbish The Atria Shopping Centre and its other prized asset, Kompleks Lien Hoe shopping centre, in a circular to its shareholders to convene an extraordinary general meeting (EGM) in 2007 on the disposal of both properties.
“It is estimated that a total capital investment of RM30 million will be needed to undertake a facelift and refurbishment exercise, which is critical to the continued survival and long-term competitiveness of the two properties. Our board, having regard to the fact that the company lacks financial resources to fund such a massive capital commitment, accepts the proposed disposals as the next best strategy to realise the value of its investment in the two properties,” it said.
As a result, Lien Hoe sold the property to OSK Property Bhd in 2007 for RM75 million. Parkson left the mall shortly after and was replaced by supermarket operator Giant.
A tenant of almost 20 years which operated a clothing boutique in The Atria observed a drop in visitors after Parkson’s departure.
“Maybe it’s because people did not stay, they only went to Giant to get groceries,” she says.
Like other tenants approached by City & Country, she will miss the old mall but admits that The Atria Shopping Centre was past its prime and a redevelopment was in order.
“It’s an ‘auntie’s mall’. Young people didn’t go there anymore. What the mall needed was entertainment ... mayb a cinema, bowling alley, or even a pool centre. Some might say the latter is not so ‘clean’ [might bring social ills], but it needed attractions,” she says.
Some tenants have expressed their desire to return after the mall is completed sometime in late 2013 or early 2014.
Meanwhile, a tenant of one of the shopoffices surrounding The Atria Shopping Centre reminisces: “It was our place to hang out. It was our place to grocery shop, to go to after work, when we were bored. Now it is going to be so boring. Seeing all the tenants leave makes my heart ache.”
Cosy commercial square
The shopoffices around The Atria Shopping Centre also have tales to tell. “There were at least 10 listed companies that got their start here,” says Ng.
These include Road Builder (M) Holdings Bhd (which eventually merged with rival IJM Corp Bhd), Patimas Computers Bhd and Dreamland Holdings Bhd (before it changed its name to Kanzen Bhd).
Some present tenants include Gamuda Bhd and its mass rapid transit (MRT) joint-venture company with MMC Corp Bhd, MMC-Gamuda Joint Venture Sdn Bhd.
The shopoffice area surrounding The Atria was also home to many famous eateries, one of them being a famous Chinese restaurant, which was known not only for its delicious and pricey cuisine but also as a meeting place for the rich and powerful.
Other famous restaurants included a Chinese one from Raub, Pahang. It was eventually sold to Koon Kee, which is well-known for its claypot dishes.
In the 1980s, there was a nightclub called the Orient Express, which was themed after its namesake, the international long-distance coach that was synonymous with the high life and exotic intrigue.
Damansara Jaya was also the first home of The Edge Communications Sdn Bhd. “We were neighbours back then!” Ng recalls with a laugh.
One of the first 7-Eleven shops opened in the area in the 1980s, and Ng helped them look for a suitable shop location. “I dealt with one of their general managers, who was an American. This was before the Berjaya group [owned 7 Eleven Malaysia Sdn Bhd],” he says.
The shopoffices and some of the homes in the area were built by See Hoy Chan. The latter were sold under the build-then-sell model.
According to Ng, even in the 1980s, a 22ft x 75ft 3-storey shopoffice was going for as much as RM555,555.
Most of the shopoffice owners bought at least two units, with Gamuda Bhd owning around five or six units while its subsidiaries Gamuda Land Sdn Bhd and Gamuda Water Sdn Bhd own three and two lots respectively, he says. Ng points out that a number of investors had bought several units and kept them for recurring rental income.
“Back then, most people would not sell their shops. Shopoffices were seen as an investment for one’s old age, unlike now when they are flipped, sometimes even before they are completed,” he says.
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 872, Aug 22-28, 2011
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