KUALA LUMPUR: Technology is not only creating ripples in the retail scene. Two obvious trends are emerging in the Klang Valley office space.
Landlords are seeing a flight to quality as multinational companies (MNCs) and local corporations take advantage of the availability of better grade office space at competitive rates and attractive tenancy terms, said Knight Frank Malaysia executive director (corporate services) Teh Young Khean.
The second trend is the growth in serviced office segment, or co-working space, as millennials and older businessmen and women turn to short-term office rental of a month or two.
“It is clean, easy and convenient. The people who opt for serviced office space need not get into the hassle of hiring staff or buying furniture or other utility bills. When they rent serviced office space, all that comes in a single bill. They opt for this segment of the office space to meet a short-term need before they go to the next city,” said Teh.
Teh was speaking to StarBiz after the launch of the fourth edition of Global Cities: The 2018 Report.
Changes in technology is supporting a flexible working culture, said Teh, and this has resulted in the rising popularity of the serviced office segment.
“Demand for co-working space is expected to grow across a diverse mix of industries and professions such as technology start-ups and small- and medium-scale enterprises (SMEs).”
Teh said clients are searching for good deals in the office market in order to turn this space into co-working space.
A co-working space centre may have space of between 20,000 and 30,000 sq ft. Some could be larger.
But like everything else, they are selective.
The first, said Teh, is connectivity. It has to be close to public transport with easy access to amenities. This brings to mind mixed integrated development, said Teh.
“They also like malls because everything can be found under one roof,” said Teh. They also like new buildings with large floor plates although there are times when, if the opportunity arises, they can turn a single medium-level block into an entire centre of co-working space,” said Teh, who saw this happening in Singapore and other cities.
Teh said out of the 100mil sq ft of office space in Selangor and Kuala Lumpur, about 500,000 sq ft, or 0.5%, are being used as co-working space today.
“This is growing,” he said, due in part to high grade office space available at very competitive rental rates compared with other cities in the region.
Regus, the operator of co-working space, which has 30 centres across Malaysia has signed up for space in a strata office block in Bukit Bintang City Centre.
The over supply of prime office space at competitive rental rates have also helped to boost the co-working office space market as operators are able to get even more attractive rates because their requirement is large.
Knight Frank Malaysia managing director Sarkunan Subramaniam said: “By 2020, more skyscrappers will dot the Kuala Lumpur skyline with the scheduled completions of the iconic PNB Warisan 118 Tower and Exchange 106 in Tun Razak Exchange.
“PNB group of companies will occupy 60 floors of the RM5bil 118-storey tower which will be the fifth tallest building in the world on completion.The entry of these skyscrappers will raise the benchmark of premium grade office space in Kuala Lumpur,” he said.