To attract and retain tenants amidst a glut of office space and falling occupancy level in Klang Valley, landlords need to offer ways to further lessen rental costs, like providing longer rent-free periods, according to JLL Property Services (Malaysia) Sdn Bhd’s country head Y. Y. Lau.
“The demand for rental to come down, rent-free negotiations, free car park and other ways to reduce cost will be some aspects of the office market this year,” she said.
Previously, typical office rents hovered between RM7 and RM10 per square foot (psf) depending on the location and building type, with Green and Multimedia Super Corridor (MSC) status properties being generally preferred by tenants due to their better internet infrastructure. But landlords are now “more flexible” and rents have been falling by around 10 percent.
“This is just an average. It does not mean that all the buildings in a particular area have a 10 percent drop,” Lau explained, adding that rents have not dropped at decentralised areas such as Petaling Jaya as there is no oversupply there.
Furthermore, she believes that office rents will continue to weaken this year, following a lacklustre 2016. The extent of the decline will depend on the property’s location, but rentals in highly sought-after areas like Petronas Twin Towers are unlikely to experience a correction at its current rate of RM13 per square foot (psf).
Featured image sourced from Getty Images
Diane Foo Eu Lynn, Senior Content Specialist at PropertyGuru, edited this story. To contact her about this or other stories email diane@propertyguru.com.my
