On A Commercial High

iProperty: 20 August 2007

The fires of industry are burning. As our society has progressively moved away from our roots of agriculture and joined into a fast-paced working lifestyle, where tomorrow’s trends are today and yesterdays are long forgotten.

In today’s landscape, an integration of residential and commercial has symbiotically merged together as one entity, not just live-work-play developments that was featured in last month’s issue, but in the larger sense – in this day and age, a residential development cannot survive without its commercial counterpart and vice versa.

Although back in the good ol’ days, the same concept was present, it was not as emphasized as it is today due to one important factor – the scarcity of land.

Sprawling spaces of undeveloped land in Klang Valley’s hotspots is not a common sight – in fact, if there was such a space, within a month’s time a sign of an upcoming development would be in its place, together with the busy flurry of construction.

From the city centre’s bustling nucleus and the desire for one to revolve around it, development has continued to grow outwards, encompassing more mini - nucleuses to revolve around, to live, work, shop in pursuit of entertainment and pleasure.

Rising rental market

Just within the Kuala Lumpur city centre, asking rental prices in prime buildings within the city’s premier business district have risen 20 to 30% over the last two years said real estate agency Zerin Properties, with iconic landmarks such as Menara Maxis, Menara Standard Chartered, Petronas Twin Towers, Menara IMC, Wisma Rohas Perkasa and Menara Citibank paving the way.

According to Reapfield Properties Sdn Bhd, Menara TA One is renting for RM5 to RM5.50psf, while Cap Square which is still under construction is already asking for RM4.50psf. Others in the vicinity, include Menara Hap Seng for RM4.70psf, Menara IMC for RM6psf and Rohas Perkasa for RM5.50psf.

Rentals from grade A buildings, such as Menara Maxis in KLCC have recently surpassed RM7psf, while in Menara Citibank as much as RM6.50psf has been attained said Regroup Associates Sdn Bhd.

The reason for the rising prices within the rental market? One might come to the conclusion with a survey of the area and according to Zerin Properties, the area has not seen any new purpose-built office buildings that would add to the limited supply.

For secondary buildings in the Golden Triangle, occupancies are also high with rentals steadily climbing, although at a slower rate than the heads of the pack.

On the Damansara front, rentals are averaging at about RM4 to RM4.80psf, with the HP Tower rentals at RM4.50psf, 8 First Avenue next to TV3 building at RM4psf and UOA Damansara 2 going for RM4.50 to RM4.80psf.

In Kuala Lumpur Sentral, rents have recently escalated with its newly acquired Multimedia Super Corridor (MSC) Cybercentre status, which in turn gives qualified businesses within the development access to a myriad of benefits under the MSC Bill of Guarantees.

Some of these benefits include globally competitive telecommunications tariffs, freedom of ownership without any need for locals to take up equity in the companies as well as unrestricted employment of local and foreign knowledge workers, among others.

According to Zerin Properties, paired with the area’s purpose as an integrated transportation hub, currently a 1,800sq ft office unit in Plaza Sentral can command between RM4.50 and RM6.50psf.

Within the Petaling Jaya Glenmarie area, rentals range from RM2.80 to RM3.80psf. With ThreeTwo Square Corporate Tower and Menara LYL with the highest rental, said Reapfield.

Gone are the days where office tenants ruled the roost, demanding free parking or rent-free partitions. In today’s market, office spaces owners are able to command their terms with a “take it or leave it” attitude with the sudden surge of demand for office space.

The emergence of commercial projects

The acknowledgement of the limited supply of prime office space in the Klang Valley has sent developers in a frenzy to development commercial projects. From Petaling Jaya, Subang Jaya, Ara Damansara to Puchong.

In Selangor’s newest dubbed city, Petaling Jaya, the area has been witness to rising land prices as well as a change in rezoning laws that have made it possible for former industrial sites to be redeveloped into commercial complexes.

Several new projects that have been completed include Jaya 33 and ThreeTwo Square, while some upcoming developments boasting the hotspot’s address are PJ Trade Centre, PJ8 and Jaya One.

These commercial complexes that are taking shape around the Klang Valley are no longer one-purpose built buildings that cater to only office or retail. In fact, they are often integrated with a mixture of both to ensure continuous walking traffic in the area.

According to Regroup Associates, investors prefer to purchase instead of rent property in PJ and Subang Jaya, with the First Subang Office Suites in SS15 are now above RM450psf.

With the suites being in close proximity to Subang Parade as well as it incorporating food and beverage as well as retail elements, according to its developer the Titijaya Group, 50% of its units were sold within a mere four weeks!

Other up-and-coming hotspots for commercial development include Ara Damansara, which is situated on the remaining dwindling freehold land in the North Petaling Jaya growth area. What was once a sleepy and quiet neighbourhood is about to change with the number of projects rising in the area.

Dubbed as one of Klang Valley’s newest hotspots, construction on various shop offices can be seen – one of them being SM Land Group’s NZX Commercial Centre.

Situated on 19-acres of freehold land, the RM320 commercial hub features three-, three-and-a-half- and five-storey shop offices flanking a climate controlled boulevard, which boasts of a unique and cool shopping experience.

According to Big House Management Services Sdn Bhd’s vice president Eddie Ang, “With the expected launch of NZX in January 1, the centre has already achieved 95% sales for the shop offices and 85% rentals of the kiosks in the boulevard.”

While Lambang Ehsan Sdn Bhd, a wholly-owned subsidiary of the Y&Y Group, is developing 1 Shamelin Shopping Mall in Cheras – which when completed, will feature retail lots within a trendy shopping mall.

Developed on 4.5 acres and boasting a gross development value of RM408 million, the future shopping destination is only a mere 10 minutes away from the Kuala Lumpur City Centre and within the most densely populated area in the heart of Cheras with a population of 500,000 within a three kilometer radius.

The project is expected to be completed by March 2009, with standard units ranging from 108sq ft to 126sq ft and prices tagged from RM118,000.

Going across the Klang Valley to Puchong, Teratai Seleksi Sdn Bhd is developing 1 Puchong Business Park, which will feature 139 three-, four- and limited six-storey shop offices.

Sales and Marketing Executive Madeleine Lew said, “Phase 1 has already achieved 95% sales, while Phase 1A follows with 85% already sold. Thus far, 1 Puchong has seen good response from the market.”

Together with the shop offices, Lew said a retail component is also planned for the area, in the lines of a “street mall” concept, along with eight to 10 levels of offices or serviced apartments.

These developments are just a smattering of what’s available in the market today. The philosophy of today seems to be – more, more, more – and it’s turning out to be a positive outlook for the fickle market.

More offerings in the horizon

Within the last decade the Klang Valley has grown in leaps and bounds, creating new areas and hotspots for developers and investors to flock to.

However, despite the creation of new places to be, the old have not been forgotten – in turn, they have matured and can now boast the title of prestigious address or can command high rental and purchase prices – such as Subang Jaya and Petaling Jaya.

The demand for office and retail space is on the rise. With better infrastructure, facilities, technology and the general population moving into a higher standard of living – developers will continue to have to prove themselves with more innovative products.

And also recognize the burgeoning need for a complete package, the 21st century needs and demands.

The Klang Valley is quickly growing into his adulthood. Unlike its confused and rebellious teenage years, developments and trends are seamlessly falling into place – the market is maturing and its future beholds many other sights to see and experience, not into in the residential but more so in the commercial sector.