Filling up office space is a work in slow progress

PETALING JAYA: While the shift to work-from-home practices and office rotations have torpedoed demand for office space and left many buildings deserted, property players are still holding out hope that the bad times will end and demand will rebound.

Data from property group Knight Frank showed that in the third quarter of the year, office occupancy in central Kuala Lumpur fell to a five-year low of 69.4%.

Christopher Boyd, consultant director of Savills Malaysia, admitted that things look bad at the moment, and may stay that way for some time, with little that can be done about it in the short-term.

“There is a supply and demand problem. While supply has increased in recent years, demand has fallen to about half of what it would be in a good year before the pandemic, so a lot of office space stay empty.”

However, he was confident that demand would recover eventually, even if he could not say when, and added that it would likely reflect the changes in work culture brought about by the pandemic.

“The future office will have to space people out more but you’re probably going to have fewer people in at any one time, so the two will even out and make your space requirements close to the same as before.”

Anthony Cho of the Real Estate and Housing Developers’ Association, Melaka Chapter, agreed that it would take a long time to fill offices again, as the property boom of the early 2010’s led to a “huge output” of commercial space, much of which still remain relatively empty given the current conditions.

“I believe it will take a long time for these existing commercial properties to be filled and operational. Finding demand for office buildings will certainly be very challenging.”

He said “time is the only solution for this office glut,” but suggested some owners may get creative in finding ways to use and monetise extra space in the interim, such as “turning a portion into serviced apartments for people working within the offices”.

Boyd, however, was less bullish about the conversion plans, as he felt many office floor plans were not conducive for such a move. Instead, he suggested that owners focus on keeping the tenants they have left by offering long but attractively priced lease agreements.

“Poor services are a big reason tenants leave, so you may also have to bite the bullet and upgrade things like fibre-optic cabling, air conditioning and lifts. Don’t waste money on the building’s facade, tenants just want things that work properly.”

Source: FMT