As Malaysia went through intermittent lockdowns due to the ever-worsening COVID-19 pandemic, the real estate market experienced a trend of office occupiers right-sizing their office space and put expansion plans on hold as they reconsider changing work environments and practices.
Different industries have been impacted differently throughout this pandemic, with an unequal impact of work from home (WFH). With more than a year of WFH experience under their belt, occupiers are beginning to realise that WFH is feasible thus giving rise to the question, “Is the office becoming obsolete?”. For some businesses, productivity increases if work can be done remotely, while this may not be the case for others that require physical interactions. With that said, there will always be a need for office space as there are limitations to WFH. The difference would be how these offices are utilised and their new roles in the corporate world.
So, what’s next?
Eventually, the new norm will transition from intermittent Movement Control Orders (MCOs) to an optimistic situation when we can return to business with no restrictions in place.
As Malaysia ramps up its vaccination drive and the virus is under control, Greater Kuala Lumpur is expected to open for business as usual. Typically, local corporates tend to favour an office first hybrid model as some of these companies are still paper based thus WFH can prove to be inconvenient for them. Conversely, MNCs in Malaysia tend to allow for more work flexibility with most of them opting for a full hybrid work model. As more companies undergo digital transformation, we may see more corporates shifting towards a hybrid work model. So what’s next for Greater Kuala Lumpur offices?
Digital adoption has been relatively slow here compared to more matured economies such as Singapore or Hong Kong. However, COVID-19 and the subsequent MCOs accelerated this adoption. The restrictions acted as a catalyst for businesses to rethink their overall office experience amidst the current trend of flexible working practices. In relation to this, some companies within Greater Kuala Lumpur have grown and expanded their office footprint during this period, such as fintech, e-commerce, and cloud computing companies. Their products and services have made them essential companies in the new normal, especially as businesses transform digitally to stay competitive. We foresee that these industries may further benefit from this changing environment and become the major office occupiers and drivers of market activity moving forward.
We observed that some companies incorporated the use of flex space in addition to their existing traditional office. We attribute this to business continuity policies and flexibility on lease terms. We witnessed a major local financial institution taking up serviced office space within the Decentralised Areas of Greater Kuala Lumpur, an area which the company lacked corporate presence. As companies become more willing to adopt flexible working and WFH policies, the practice of flex space will be a fixture in portfolio management. It will likely form a larger share of a firm’s corporate real estate planning. This could influence companies to hunt for smaller and a wider network of multiple locations to operate in.
When the time comes, opportunities to innovate office usage in Greater KL may yet present themselves to cater for the rapidly changing work environment. One thing is for sure, the office will be far from obsolete.
For more details, please download our latest research paper, “What’s next for offices, after the COVID-19 pandemic?”.
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