KL office market to remain soft for rest of the year

KUALA LUMPUR: The Kuala Lumpur office market is expected to remain soft for the next six months, according to a research report by YY Property Solutions in association with Cushman & Wakefield.

Rental rates are facing downward pressure even for some of the prime office buildings, stated the KL Office MarketBeat report for 2Q2010 on Tuesday, July 27.

“Landlords are and have been offering better terms to tenants due to an increase in competition from existing and newly completed office buildings,” the report said.

“Although in 1Q2010 the country’s real GDP experienced a growth of 10.1%, the pace of demand for office space has not matched this improved economic situation,” it added.

However, it noted that there have been more active enquiries compared with previous quarters.

The average rental rates for Grade A buildings as of 2Q2010 in the prime KL central area is about RM6 psf per month, while similar buildings on the fringes of KL are recording an average of RM4.66 psf per month. 

Significant new lease transactions recorded during 2Q2010 are ICBC Bank and Goldmen Sachs in Menara Maxis in KLCC, with both firms taking up 7,000 sq ft each; MEPS settling in 55,000 sq ft in Bangsar South, Kuala Lumpur; CIMB Investment filling up 15,000 sq ft in Tropicana City, Petaling Jaya; and P&G leasing 26,000 sq ft at Surian Tower in Mutiara Damansara.

Projects under construction that will add more office space to the mix are in the Kuala Lumpur city centre. 

Among those projects are Menara Worldwise, which offers a net lettable area (NLA) of 277,000 sq ft and will be ready in 3Q2010, while Hampshire Place (NLA of 240,000 sq ft) and Cap Square Tower 2 (NLA of 600,000 sq ft) are both targeted for completion by 4Q2010. 

Glomac Tower (NLA 520,000 sq ft) and Menara Chua (NLA of 370,000 sq ft) would be completed in 4Q2011, while Integra Tower (NLA of 736,000 sq ft) is expected to be ready in 2Q2012.