Property
Are businesses reducing real estate footprint?
V Sanjugtha | 01 Nov 2017 00:30
Developing countries like Malaysia benefit from the outsourcing of services which calls for more office space

The global office market is facing shrinking demand owing to businesses downsizing and the rise of co-working and shared office concepts. As this trend spreads across Asia, how will it affect the 31.82 million sq ft of vacant office space in Greater Kuala Lumpur?

 To aggravate the situation, a total of 13.34 million sq ft of incoming office space will boost supply to a whopping 139.42 million sq ft in the next three years.

 Khong & Jaafar managing director Elvin Fernandez warns that the Grade A buildings currently flooding the market and reporting good take-up rates are merely reporting attrition as most tenants are previous occupiers of the less efficient Grade B buildings or legacy buildings that are decades old and offer fewer facilities for the same rental rates.

 “What happens to the void in the market when they leave these older buildings? The owners will not be able to find new tenants easily in the current market and are left with an occupancy rate of about 50% or less,” he tells FocusM.