With about four million sq ft of new office space set to enter the market in Q1 2019, leasing is becoming a challenge for the Tun Razak Exchange (TRX).
This comes as over half of the new office space set to be ready soon includes the 2.6 million sq ft at Exchange 106, Indonesian Mulia Group’s six-star office tower, reported The Star.
“The timing is not right. They (owners of Exchange 106) will be competing with the stock that is already in the market, and those that are entering the market at about the same time,” said the industrial source.
The source noted that while infrastructure – the ingress and egress – to the TRX are fantastic, they are not yet ready. As such, even if tenancies were to end by end-2018, potential tenants may not be able to move in by Q1 2019 as they would need months to prepare the place.
“How are they going to do that when the infrastructure – the ingress and egress – are not ready?” asked the source.
A real estate agent, who wished to remain anonymous, said: “Infrastructure, the ingress and egress have to come up to speed”.
WCT is overseeing the infrastructure development in TRX, while the NAZA group bagged a major upgrading works in Jalan Tun Razak, which will connect to TRX and beyond. Gadang Holdings Bhd is also undertaking engineering works at MRT TRX Plaza.
Aside from infrastructure, another challenge facing TRX is the asking rent.
Initial asking rent for Exchange 106 stands at RM17 per sq ft (psf) – up from the RM7 to RM8 psf for Grade A office space in Kuala Lumpur.
Sources, however, expect the RM17 psf initial asking rent to fall between RM11 and RM12 psf – similar to office space within Kuala Lumpur City Centre (KLCC), particularly the Petronas Twin Towers as well as other super prime offices.
In a June report, TRX City Sdn Bhd CEO Datuk Azmar Talib revealed that Exchange 106, which is the first phase of TRX project, is expected to be ready for occupancy by early-2019.
And while it may take some time, he expects TRX to do just fine, with HSBC and Affin there along with other banks and financial institutions.
And should TRX “not take off well, bearing in mind this is one of our very prime development, this will be a shame for all of us Malaysians”, said an industrial source.
Source From: https://www.propertyguru.com.my