More empty malls — lowest occupancy rate in 17 years

Occupancy rate in 2020 declined further, falling from 79.2% in 2019 to 77.5% as retailers struggle to stay open


MALAYSIA’S shopping mall occupancy rate declined for a fifth straight year, falling to 77.5% in 2020, its lowest since 2003, as retailers continue to be hammered by movement restrictions brought upon by the Covid-19 pandemic.

Data by the National Property Information Centre (Napic) showed a further decline in occupancy rate for shopping complexes in 2020, falling from 79.2% in 2019 as retailers struggle to stay open with tight margins and low footfalls.

Napic also revealed that the total area of occupied space saw a marginal decline to 13.06 million sq m as retail space grew.

“Apart from that, more new shopping malls are expected to complete and enter the retail market, which will lead to increased competition among mall owners to attract tenants and shoppers,” the report stated.

Last year also saw 13 more complexes with certificates of completion and compliance joining the market, which added nearly 350,000 sq m of retail space into the market in 2020.

The 13 complexes included KL East Mall in Setapak, Kuala Lumpur (KL), with a net lettable area of 35,694 sq m, Tropicana Gardens Mall in Damansara, Selangor (92,903 sq m), Paragon Market Place in Johor Baru (37,161 sq m), Mydin Mall Jengka in Pahang (26,864 sq m) and KTCC Mall in Kuala Terengganu (42,369 sq m).

As at year-end, there were 16.85 million sq m of existing retail space from 1,050 shopping complexes, most of which were shopping centres comprising 556 buildings with a retail area of 12.61 million sq m.

The report stated that Selangor dominated the existing retail space with 153 shopping complexes offering 3.7 million sq m.

There are another 42 complexes with 1.81 million sq m in the incoming supply and 13 complexes with 510,000 sq m in the planned supply. Melaka recorded the lowest occupancy rate at 63.3%, followed by Negri Sembilan (66.6%), Pahang (72.2%), Penang (72.8%), Sarawak (73.9%), Kedah (74.6%) and Johor (74.9%).

The Federal Territories of KL and Putrajaya recorded occupancy rates of 82% and 81% respectively, while Selangor’s shopping complex occupancy rate is 80%.

The report also revealed that rentals of retail spaces were generally stable in the Klang Valley with mixed movements seen in selected complexes.

Suria KLCC fetched the highest rental range per month from RM458 per sq m (psm) to as high as RM2,400 psm at the concourse level, charting an increase of 2.5% to 5%.

Rental at The Gardens Mall was generally stable save for its retail spaces at Levels 1 and 3, which recorded rates at between RM183 psm and RM323 psm, down by 2.3% and 3.6% respectively.

In Selangor, The Curve registered an average growth of 5% with rental ranging from RM21.50 psm to RM422 psm. Puchong’s IOI Mall recorded negative growth of 2.2% to 5.7% with rental ranging from RM65 psm to RM313 psm.

Napic expects the retail segment to remain flat in the first half of 2021 as competition from online shopping platforms intensifies.

“Neighbourhood malls that are occupied by shops providing essential products and services are likely to perform better and recover quicker compared to malls focusing on luxury offerings, while tourist-focused retail malls’ performance will mainly depend on when international borders reopen,” the report stated.