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Sunday, November 23, 2008

Rates still attractive

Real estate agent Daniel Goh of CBD Properties is a busy man these days.

Despite all the gloom and doom about the global financial crisis and general softening market, he still sees the Petaling Jaya (PJ) office market rental rates and values holding well.

Goh is confident that more businesses will relocate to Petaling Jaya as it is more affordable than Kuala Lumpur.

“Companies are moving from the city centre to PJ, Shah Alam and Klang where the rentals are lower and also nearer to their employees’ homes,” he says, adding that during a downturn, larger companies might downsize their operations and go for smaller but modern offices; PJ has many new ones to offer.

“I just closed a deal to rent out a 6,000 sq ft office space in Jaya One in Section 13 for about RM2.50 psf inclusive of maintenance fees,” he says, adding that he had also recently done a deal to rent out a 6,400 sq ft office space in Brem Tower in Kelana Jaya for RM3 psf.

Goh has also found several tenants for Menara LYL at Jalan 51A/223 which is ideal for companies looking for bigger spaces from as low as 7,500 sq ft to an entire floor of 30,000 sq ft.

Despite the asking rent of RM4.50 psf, which is higher than the RM2.50 psf to RM3 psf in other areas, this new, modern building is almost fully occupied with tenants like Jaya Palace, McCannWorldgroup, Red Oven, Jobhunt and Standard Chartered Bank.

Office workers from Menara LYL and its adjacent Menara Axis, Crystal Plaza and some older buildings can walk to an LRT station in front of their offices.

In the 1970s, there were only a few buildings at the intersection between Jalan Utara/Jalan Barat and the Federal Highway. They include the former Jaya Puri Hotel (now called PJ Hilton) and the Asia Jaya shopping mall. Later came the Armada Hotel.

Today, this area is a hive of activities. Coming up is Malton’s VSQ office cum serviced apartment project next to the Tun Hussein Onn Hospital.

Right at the highway intersection is the newly completed RM250mil PJ8, an iconic landmark. Located on the former 3.8-acre leasehold, Cycle & Carriage showroom site opposite PJ Hilton, this L-shaped development comprises three office blocks (12, 13, 17 stories) and a 38-storey tower (tallest in PJ) with 310 serviced suites. It has 1,100 parking bays.

Developed by land owner Mega First Corp Bhd and IJM Corp Bhd, the development is set to be the latest “happening” place with a 23,000 sq ft plaza, elevated six metres above ground.

IJM Land Bhd managing director Datuk Soam Heng Choon says all three stratified office blocks had been sold (one sold en bloc) while more than 85% of the serviced apartments had also been sold, leaving only the bigger units. Mega First had also occupied substantial office space there.

He says the early batch of office suites had already appreciated in value and were now worth RM560 psf.

Contrary to talks that it might be difficult to rent out the office suites at RM4 psf to RM4.50 psf, Soam says owners had rented out many of their units, and there had been many enquiries for 20,000 sq ft to 30,000 sq ft space.

Soam says office rentals in the city were more expensive. For example, KL Sentral offices were being rented out for between RM7 psf to RM8 psf.

Kim Realty Sdn Bhd chief executive officer Vincent Ng says the new strata titled offices with security features and retail components were attracting certain companies especially small foreign firms who were image conscious.

Ng: Strata titled offices attracting small foreign firms who are image conscious.

On the office market in the Damansara area, Ng says rentals and values in Damansara Jaya were generally lower than those in SS2 and Damansara Utama commercial areas.

He says rentals for the first floor office space in Damansara Jaya was about RM1,500 to RM1,800 a month while the ground floor rentals were as low as RM3,000 to RM5,000.

The ground floor rental of SS2 ground floor shops could be as high as RM10,000 a month and the price of a shop house there were in the region of RM3.5mil to RM3.6mil.

By The Star

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