Mulia building sets highest rental rates for office

KUALA LUMPUR: The Exchange 106 in Tun Razak Exchange is asking RM17 per square feet (psf) from prospective tenants – a rate that is amongst the highest in the city.

The building offering 2.6 million square feet and positioned as the iconic tower in the TRX development is expected to be completed this year.

So far about 47% of the office space is said to be have been taken up and a further 9% is under negotiation.

Property consultants said that with various tax incentives thrown in by the government for offices located in the TRX development, the rate could work out to RM2 psf. 

The tax rate for offices in TRX is 15%, lower than the normal corporate tax rate.

The building is 51% owned by the Ministry of Finance and the rest held by the Mulia Group of Indonesia. It is learnt the MoF recently bought Mulia Property Development Sdn Bhd, the company that owns the building.

When completed this year, The Exchange 106, at 492 metres with 106 levels, will be the 15th-tallest building in the world, about 40 metres higher than the Petronas Twin Towers.

The Petronas Twin tower was completed in March 1996 and office occupancy rate was more than 90% then. The Petronas building eased the acute shortage of office occupancy space in 1996.

In the case of the Exchange 106, it is coming to the market when there is a surplus of office space.

According to Bank Negara’s latest quarterly report, office vacancy rate in the Klang Valley has increased steadily to 23.6% in the first quarter of 2017 from 20.9% in the first quarter of 2015.

The office vacancy rate in the Klang Valley is higher than the national average of 18.1% and more than three times the regional average of 6.6%.

The central bank predicted that one-in-three office buildings would be empty by 2021 with the incoming glut of office space.

The TRX Exchange is a project that was initially given to the financially troubled 1Malaysia Development Bhd (1MDB) that has difficulty in servicing its debts. 1MDB started in 2009 and fully owned by the Federal Government.

In a restructuring, the MoF took over 1MDB’s assets including the TRX development and the Bandar Malaysia project.