Integrated developments to gain popularity in KL, says JLL

KUALA LUMPUR (July 28): The concept of integrated developments with office, retail, F&B and leisure components is trending in the office rental market because it is popular with younger buyers, says JLL Property Services (Malaysia) Sdn Bhd's latest Kuala Lumpur office outlook report.

YY Lau (pictured), country head and managing director at JLL Property Services said at a media briefing today that the new generation preferred the integrated design to maintain a “life-work balance” lifestyle as “[people] are tired of travelling and parking is also an issue in Kuala Lumpur”.

According to the report, the gross asking rents at KL CBD is RM6.34 psf/month in 2Q2015, which increased slightly from RM6.30 the previous quarter due to new building completions. KL fringe, meanwhile, saw gross asking rents of RM5.98 psf/month in 2Q2015.

Kuala Lumpur CBD is defined by JLL Property Services as areas such as KL city centre, Golden Triangle and KL's older commercial area. Meanwhile, the KL fringe area comprises KL Sental, Mid Valley City, Bangsar/Pantai/Kerinchi and Damansara Heights.

However, JLL expects rents to decline on the back of the weakening economy, which may subsequently result in the decline of capital values.

Lau also highlighted that strata office buildings are also gaining popularity as they ease liquidity concerns for developers while business owners are provided with the option to own property.

"We find that local companies have the tendency to buy their own offices," she added. "They might be thinking that instead of paying rent every month, they should just buy an office space."

More than five million sq ft of stratified office space is scheduled to come into the market in the next two years, with the majority located at KL fringe area. Some of these projects include Q Sentral, The Vertical Office Suites, KL Eco City and Empire Damansara.

Meanwhile, JLL Property Services expects to see larger floorplates to support open plan “work smart concept” or “hot desking concept” for a more collaborative work environment. Lau explains that employees won’t have a permanent seat in their office, and this helps tenants to reduce the total workspace needed.

“(Also) office suppliers are concerned about rising occupancy costs due to the GST, and subsequently reducing the average space per headcount from 120 sq ft per pax to 100 sq ft per pax,” Lau said, adding that demand for office space will be subdued owing to the weaker economy.

She added that large infrastructure projects being carried out around Kuala Lumpur are changing tenant requirements, with preference for those near amenities such as LRT stations, highways, public transportation hubs and the availability of shuttle buses, resulting in new hotspots and opportunities for developers and landlords.