THE demand for retail and office space is expected to increase next year, despite hybrid work trends, rising interest rates, and overall economic uncertainty continuing to cloud the future of commercial buildings.
CCO & Associates (KL) Sdn Bhd ED Chan Wai Seen said the overall occupancy rate for purpose-built offices and shopping complexes are estimated to be about 71% and 75% respectively.
He added that occupancy rates of the commercial buildings were at their worst during the Covid-19 pandemic and many commercial buildings are recovering with the easing of the Covid-19 standard operating procedures and reopening of the economic sectors.
“Barring any unforeseen circumstances, commercial buildings located at strategic locations and are well-maintained should record improvements in 2023,” he told The Malaysian Reserve (TMR) recently.
Speaking on what happens to the old, vacated buildings when big tenants move out to another new building, Chan said the old and unattractive commercial buildings will suffer considerably.
He noted that many old purpose-built office buildings have remained vacant after the big tenants vacated these buildings.
“This will reduce rental rates too.
“While some old office buildings may be able to survive with low rental rates, many old and poorly managed shopping complexes were forced to totally close down when they are no longer operationally viable,” he said.
Nevertheless, Chan pointed out that many old buildings are located at prime locations and are suitable for redevelopment, repositioning or repurposing.
He added that while the current property market situation may not be conducive for redevelopment, owners should consider repositioning the building or changing the building to other purposes such as a whole- sale centre or specialised complex, among others.
“We suggest the government provides tax incentives to the building owners that undertake major refurbishment to improve the building conditions or to repurpose the building.
“This will encourage owners to undertake refurbishment on the building and enhance the economic value of the building as opposed to leaving them empty,” he said.
Chan also stressed that the government should conduct a detailed study on the possibility of creating a special development zone for the old commercial area.
He said such special development zones will encourage owners to redevelop or repurpose these old commercial buildings.
Meanwhile, Centre for Market Education research fellow Dr Consilz Tan said.....
Read more at https://themalaysianreserve.com/2022/12/20/commercial-property-demand-expected-to-rise-in-2023/
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