Save empty retail spaces, redevelop for other uses

by S BIRRUNTHA / pic by MUHD AMIN NAHARUL

PROPERTY developers are urged to convert malls and retail spaces, which are unoccupied following the impact of the pandemic, by incorporating mixed strategies for different customer profiles.

CCO & Associates (KL) Sdn Bhd ED Chan Wai Seen said these retail spaces can be turned into offices, colleges, rental accommodation, hypermarket, wholesale and IT centres.

However, he added, the viability of this option will depend greatly on the building structure, location and many other aspects.

“For this issue, we may have to study on a case-by-case basis. Developers could re-strategise the tenant mix of the shopping mall by introducing new tenants who can attract customers and avoid competing with nearby shopping complexes.

“Other options include redeveloping the whole building. Many old retail spaces are low-rise buildings while the current planning guidelines allow for larger and taller buildings on the same site, so it may be more feasible and profitable to redevelop the buildings,” he told The Malaysian Reserve.

Chan noted that many malls are built to create added-value to other development components within the project, namely serviced apartments and offices.

He also said many developers rushed into building shopping malls without the expertise in managing and operating shopping malls.

“Many developers are no longer keen on building shopping malls after realising the challenges of developing retail spaces.

“Each locality also comes with its own supply and demand situation but with niche strategies that differentiate one mall from the others, the opportunity to succeed is there,” he added.

Chan emphasised that developers should first understand their catchment market, come out with a good tenant mix strategy and get the right team to run the malls.

Meanwhile, Asiacap Valuer & Property Consultants Sdn Bhd property valuer Kit Au Yong said some property managers have already incorporated a lifestyle element into their retail spaces even before the pandemic, where they add more food and beverages, events and entertainment into their tenant mix.

This trend has the potential to grow as some of the retail spaces are still evolving, especially those with single owners without the challenge of getting pool resources to get things moving coherently.

“Those with little choice may have to turn into office space which collects less in terms of rental and event space like bazaars and temporary kiosks to pull in more crowds.

“Other alternatives would be service-based retail space like niche medical wellness clinics which have less traffic than the usual mass retail space.”

Au Yong highlighted that it is important for retail spaces to evolve when there is too much supply of the same category, while the market is very dynamic and always changing, especially with the rapid adoption of e-commerce.

These days, Au Yong added, people have high expectations of retail spaces where they want to have experiences beyond retail and shopping.

“Being big is no longer the winning formula. Now, it is about what the market needs, how to entice them with a better experience, convenience and so on,” he noted.

Nevertheless, Au Yong said the market is currently seeing good signs of foot traffic, with people coming back to malls after the government gave economic activities the green light to reopen.

According to data by the National Property Information Centre, the overall occupancy rate for shopping complexes decreased to 78.6% in the first half of 2020 (1H20) from 79.2% in 2H19.

Malaysia currently has more than 1,000 shopping complexes offering a total of 180 million sq ft of net lettable retail space.

Selangor dominated the existing retail space with 151 shopping complexes in 1H20, offering a total space of 3.71 million sq m (39.93 million sq ft).