Tech chang­ing of­fice space trend

Seg­ment see­ing more com­pet­i­tive rates and growth of co-work­ing space

The Star Malaysia - StarBiz - - News - By THEAN LEE CHENG leecheng@thes­

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.

Re­port launched: (from left) Sarku­nan, In­vestKL CEO Datuk Zainal Aman­shah and Knight Frank Asia-Pa­cific head of re­search Ni­cholas Holt at the launch­ing of Global Cities: The 2018 Re­port.

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