With a mammoth skyscraper in Kuala Lumpur about to be completed, the glut of office space is going to get much worse. The Exchange 106 at the Tun Razak Exchange (TRX) is expected to be ready by year-end and will add another 2.8 million sq ft of commercial space to the city.
Another mega project, Merdeka PNB 118, will add another 1.65 million sq ft when it is fully completed by 2024. And there are others, including the Bukit Bintang City Centre.
Real estate consultancy Jones Lang Wootton opined that the TRX project will take a long time to achieve full occupancy because of the huge pipeline of supply. It is worth noting that Tower 2 of the Petronas Twin Towers took about a decade to achieve full occupancy.
The supply glut was evident even a few years back, given that the average occupancy rate then was only around 70%.
The National Property Information Centre says KL has about 90 million sq ft of office space, with an occupancy rate of 78%. In KLCC alone, there is about 17.7 million sq ft of grade A purpose-built office space, according to JLL Property Services (M) Sdn Bhd.
When the Petronas Twin Towers was completed in 1998, the economy was in dire straits, contracting 7.4% before rebounding strongly the following year. While the economy is expanding now, growth is tepid and sentiment weak.
Developments need to be spaced out by taking into account supply conditions. There has to be more thought given to supply and demand dynamics when considering applications for mega projects.