KUALA LUMPUR: Even as construction progresses at the Tun Razak Exchange (TRX), the overall retail scene and by extension, the Lendlease group, may be find itself between a rock and a hard place.
With Klang Valley’s over supply of retail space, uncertain national and global economy, the Australian property and infrastructure group is leaving no stones unturned to smoothen its path as it establishes its 17-acre Lifestyle Quarter in TRX as the future destination of the city.
Although The Lifestyle Quarter will only be completed in 2020/2021, a spokesman from Lendlease said: “We want to share more information on what we are doing.
“All along, we have not been sharing what we are building there. Now we are ready to share what we are doing there and what Malaysia can expect,” the source from Singapore said on Saturday over the telephone.
He said the Australian listed company is currently in a blackout period and will only share more tomorrow.
Its official launch of the TRX retail precinct tomorrow has secured the presence of no less than the Finance Minister Lim Guan Eng.
Known as The Lifestyle Quarter, the mixed integrated development is a 60:40 joint venture between Lendlease and TRX City Sdn Bhd.
Because TRX City Sdn Bhd is a wholly-owned subsidiary of the MoF, this means the government owns 40% of The Lifestyle Quarter.
An industry source involved in the overall TRX said Lendlease would need to “launch it although the project is still pretty much a construction site and the mall will take another further two years in the making.”
“They need to invite prospective tenants to come and see what they have to offer. They will do their launch show, the visuals and to announce to the retail world ‘hey, budget your time and space because we are coming’,” said a source.
They are giving potential tenants their timeline and what they have to offer. After this launch, they will be more aggressive, in view of the current retail scene.
“So far, Lendlease has been pretty consistent. What we have seen today are their external renderings. We know there will be about two million sq ft of gross space, 1.33 million sq ft of net lettable area (NLA), which is the size of Pavilion KL and they will have a 10-acre roof-top garden which is under TRX City Sdn Bhd.
“But we don’t know what is internal layout like so they will have to tell us,” the source said. For comparison, according to its website, Pavilion KL has a NLA of 1.37 million sq ft. Suria KLCC has more than 1 million sq ft of NLA.
Although it is a known fact that Lendlease has secured Japanese departmental store Seibu, cinema operator Golden Screen Cinema and Dairy Farm a far back as a year or so ago, Dairy Farm has several supermarket brands in its portfolio.
“Maybe they will try out something new in that international location,” the source said, adding that having established their anchors, the next stage is tenant mix.
There is a lot of “herd mentality” in the retail world. Because so-and-so is there, their presence gives confidence to others who may well include their competitors.
Likewise, the presence of Lendlease, the first to take up the 17-acre Lifestyle Quarter in 2014 gave confidence to other subsequent entrants, said a TRX City Sdn Bhd source.
The source said the launching of the retail precinct tomorrow, though yet to be ready until two years later, is considered as the lifeblood of the entire project, and will help to establish TRX as a new “district” within the city centre.
But another industry source thinks Lendlease has a high mountain to climb in view of the current weak economy and global uncertainties, and the over supply of retail space in the Klang Valley.
Said the industrial source: “Parkson departmental store, it was reported, was asked to leave Suria KLCC.
“Because anchors take up large space, they pay a lower rental comparatively. In a weak market, it is normal for landlords, especially one with a real estate investment trust (Reit) which needs to generate income, to divide the space vacated into smaller stores and charge a higher rental.”
A statement from KLCC Property Holdings said: “Parkson’s departure is following the expiry of its lease. The area occupied by Parkson is in excess of 126,000 sq ft, and the space will be transformed into a new shopping experience with diversified tenant mix including fashion, cosmetics and food experiences.
“This is in line with Suria KLCC’s positioning of Always Something New,” KLCC Property said.
A property source asked if that is the scenario in the city’s premium mall, how is it possible for Lendlease to come into the city with a big bang two years from today.
The source added that Lendlease was also involved in SP Setia’s Setia Mall in Shah Alam.
Another property source said Lendlease is taking the bull by the horns. The source said the Australians are working with clients as to the layout and logistics.
There is a lot of detail in retail, where clients want their escalators, their cold room if it is a supermarket, how they want to drive traffic, the source said.
Together, Dairy Farm, GSC and Seibu will take up a total of 347,000 sq ft of space, or 26% of the net lettable area of 1.33mil sq ft as reported in August 2018.
Lendlease completed their leasing suites in Menara JCorp last year in preparation to sign up with new tenants.
In an email interview with StarBiz in August, Lendlease CEO for Asia Tony Lombardo said the Australian group is planning to have about 500 stores in The Lifestyle Quarter.
The residential units will be launched in 2019 and there will also be a hotel on the 17 acres.