KGV: Flatted factories a cheaper solution to costly office space

KUALA LUMPUR: Flatted factories are giving office buildings in the city a run for their money, as tenants seek cheaper storage choices, according to KGV International Property Consultants (M) Sdn Bhd.

With rents of Grade A offices in the city averaging RM6 per sq ft (psf), businesses are finding it costly and inefficient to keep their files and other materials onsite.

"A storage facility in the form of flatted factories may be a cheaper solution. Likewise, retailers in the city centre require their stocks to be kept nearby, and not on expensive commercial space," said its director Anthony Chua.

The supply of such factories is limited, as there were no new buildings in the market recently, he said.

KGV reported in its latest newsletter, a quick survey of two flatted factories in Kuala Lumpur and another three in Petaling Jaya revealed that they were almost 100% occupied.

"The acute shortage of industrial premises in the city centre presents an opportunity for developers to provide a solution for storage, light manufacturing, assembling, and services — all of which are related components for thriving commercial activities," it said.

Flatted factories are a combination of offices and factories — the finishing is not as good as offices, but they come with factory-grade facilities, such as freight lifts that give higher capacity, and higher ceilings. The rental is from RM1.50 psf to RM2 psf.

Chua said a possible solution may be the reintroduction of flatted factories, as no new ones have been built in the past 10 to 15 years.

"An improved version of these flatted factories, with better quality, image and facilities, may attract the interests of manufacturers and retailers who want to keep their operations and stocks close to their business trading locations," said KGV.

This article first appeared in The Edge Financial Daily, on September 13, 2013.