Q3 occupancy rate of malls in Klang Valley at 85.3%

PETALING JAYA: The local retail sector could see an integration of co-working spaces into malls within the city centre, should occupancy rates continue to deteriorate.

Nawawi Tie Leung Property Consultants in a recent report said the overall occupancy rate for shopping malls in Klang Valley as at the third quarter of this year stood at 85.3%, with prime malls continuing to maintain occupancy rates of above 90%.

“The introduction of non-retail components into shopping malls, such as co-working space, is not uncommon and is now gathering momentum both locally and globally.

“In the western hemisphere, this trend became a subject of interest following the widespread closures of multiple giant retailers, which resulted in high vacancy rates in shopping malls,” it said.

The report said the arrival of co-working spaces to malls represents a win-win arrangement for both operators and landlords.

“The co-working space enjoys the convenience of a mall, while the mall benefits from the filled vacancy and increased footfall. Locally, co-working spaces in the city centre are primarily integrated with office buildings. In the KL fringe areas, however, there is more diversity, as co-working space may also enter into shop offices and shopping centres.

“The availability of space and relatively lower rental rates allow the operators to fill the retail space in the fringe area. On the contrary, the same does not apply to malls in the city centre, which mostly enjoy high occupancy rates,” it said.

Meanwhile, Pavilion Bukit Jalil retail planner Datuk Joyce Yap said the growth in online retail is unlikely to significantly affect the businesses of physical malls.

“I believe that they can co-exist with the physical stores, but you can’t ignore it. If online can replace offline, then why is Ali Baba buying more physical stores,” she said last week at a media event to announce Pavilion Bukit Jalil City mall’s new tenants.

Yap noted that online shopping in Malaysia currently only accounted for between 5% and 6% of total retail transactions.

“What retailers need to do is find out how online can help them to enhance their branding and reach a wider crowd. But they will still want people to come to their store to buy. If you look at the world statistics, 90% of purchase is via physical stores, but we cannot ignore it because online has its advantages.

“For food, you have Grab Food, but Malaysian culture is that we go dining with family and friends.

It’s the social interaction you want, the bonding you want to build up. It’s not like overseas where you go out only when the weather is good. Shopping is a way of life in Malaysia,” she said.

Citing data from Retail Group Malaysia, Nawawi Tie Leung said retail growth is expecting to reach 3.2% and 4.8% in the third and fourth quarters of 2019 respectively, underpinned by the anticipated improvement in the department store cum supermarket sub-sector.

“For the full year of 2019, projected growth was revised downwards from 4.9% to 4.4%,” it said.