Kuala Lumpur office rents under persistent downward pressure
Rents and capital values are still under pressure as landlords drop asking rents.
Soft demand persisted across all three submarkets of KL City, KL Fringe and Decentralised Areas, as tenants continued to be cautious in renewing their existing tenancies.
According to JLL, sectors such as technology, e-commerce, as well as the financial sector nonetheless performed well, with expansions recorded alongside movement due to flight-to-quality, while other sectors continued to see challenges and were observed to re-strategise their space requirements.
Here’s more from JLL:
Completions delayed due to stop-work order
Total supply stagnated as no new supply were noted during the quarter. Many scheduled completions saw delays (of around 3 to 6 months) as stop-work orders were issued on construction sites as part of the Movement Control Order (MCO).
Vacancy increased as rightsizing continued to be the main theme across all submarkets. We observed some occupiers either surrendering office space or putting hold on expansion plans during 1Q21.
Rents and capital values remain under pressure
Downward pressure on rents persisted as some landlords continued to drop asking rents in selected submarkets especially in KLC where the majority of occupiers are from the financial services and oil and gas industry.
Investment sentiment for office space was muted as many investors looked to re-strategise their investment plans. We have observed more buildings put up for sale by owners/landlords during the quarter.
Outlook: With WFH policy lifted, office utilisation is set to increase
The government relaxed the work-from-home policy effective 1st April, thus going forward, office space utilisation will likely increase as workers return to office in full or near-full force.
With significant supply expected in the coming years, office locations in KL City and KL Fringe may likely experience downward pressure on rents and occupancy rate.
Kuala Lumpur Office refers to Kuala Lumpur's Grade A office market.