Opening of retail mall at TRX Exchange delayed

KUALA LUMPUR: The opening of Lendlease’s retail mall with a 10-acre rooftop park will be delayed to 2022 as a result of the movement control order (MCO). It was originally scheduled to open in late 2021.

“We are assessing the impact of the MCO and working with retail partners to confirm the preferred opening dates in 2022, ” Lendlease project director for The Exchange TRX Brendan Walker (pic below) said.

Although all their sites at The Exchange TRX are back to work with over 1,500 workers already tested, inducted and operating safely under the new Covid-19 operating procedures, he said the shutdown has “directly impacted and continues to impact the progress of works onsite”.

The MCO, imposed on March 18 to contain the spread of the coronavirus disease (Covid-19) has been extended until Aug 31 on a recovery mode.

At the same time, the pandemic and the resulting shutdown has laid bare the fissures and weaknesses in the retail sector and other economic sectors.

This is not unique to Malaysia but the excessive mall space has been somewhat amplified.

On how the mall and the shopping experience can be reinvented to thrive in a post-pandemic environment since The Exchange is still work-in-progress, Walker said all businesses are reviewing their business models and how they can continue to offer strong value propositions to the customers.

“The retail landscape will continue to evolve and ultimately, businesses will need to continue to innovate and deliver what the customers want, ” he said.

As for their project, he said the concept they have developed is “progressive and relevant to the changing market in which they will be operating.”

“A well-conceived asset will be resilient and maintain a strong market proposition, ” he said.

They are in constant communication with retail partners, he added.

He said retailers will use omni-channels to reach out to consumers but there is a place for the traditional mall.

“Many still value the ability to touch and feel the products, the convenience of bringing home new purchases immediately and the immersive experience of walking through the stores and browsing, ” he said.

In January, Lendlease said 50% of its net lettable area (NLA) of 1.33 million sq ft was already leased; and that it was targeting 90% of its NLA to be leased closer to its opening date.

Walker said Lendlease is keeping to those targets. He declined to say if the tenants who have committed to take up to 50% of the NLA will be walking away if the opportunity avails itself based on their contracts, in light of Covid-19.

“We are not able to discuss our commercial terms” but he said “ongoing discussions with tenants are positive.”

“While all businesses are rightly very focused on managing the impacts from Covid-19 in the short term, we remain confident that the support from our partners towards The Exchange TRX will be maintained.”

There were concerns from stakeholders whether Lendlease would be facing hiccups. Its three anchors – Japanese Seibu departmental store, Cold Storage and Golden Screen -- are believed to have committed to about 50% of the 1.33 million sq ft, or 665,000 sq ft combined.

Retail is expected to languish with retailers closing around the world.

It would be an issue if they are unable to sign up new tenants, a source said.

Across the globe and even in what is considered as more vibrant Asia, which has held up better in this health crisis compared with the West, retailers have been going under. Supermarket chains in Malaysia have been closing the last one year or so, Cold Storage among them.

Elsewhere, Zara is reported to be closing 1,200 stores worldwide.

American retailer JC Penney is closing as part of its bankruptcy protection plan. CNBC reported record closures this year are expected.

It will be “swell to record high”. Those not closing will be competing for deals to bring new tenants in, CNBC reported.

In Kuala Lumpur, retail consultant Allan Soo is positive. He said The Exchange would be a crowd puller because of its connectivity, served by two MRT lines and from its direct link with the Smart Tunnel and from Jalan Tun Razak.

“Lendlease has a highly-attractive mall planned for The Exchange, with parks and some very exciting tenant mix. I would not expect that there (will) need to be any replanning here, ” he said.

Like Suria KLCC and KL Pavilion, it will be a tourist destination. The whole of TRX will have a comprehensive infrastructure support: 8.5 million sq ft of office space (or more than 2.65 times Petronas Twin Towers’ office space NLA of 3.2 million sq ft) and more than 3,000 high-rise residential units when fully-built, he said.

“That in itself, is a large enough ecosystem to support its mall, ” Soo said.

Retail Group Malaysia managing director Tan Hai Hsin said The Exchange has been positioned as a upmarket mall and will draw on the office workers and hotel guests from its immediate surroundings as well as those living in the city, and that the completion of its mall is a much-looked-forward event.

Lendlease, the Australia-based construction and infrastructure group, was the first to buy 17.5 acres in the 70-acre project, giving it much-needed credibility during its initial years.

The TRX development has had its share of ups and downs over the years.

Lendlease is the major partner in the 60:40 joint venture with TRX City Sdn Bhd, the master developer of TRX, and wholly-owned company of Finance Ministry.

In an earlier version, it was erroneously reported that Harvey Norman was closing its Malaysian stores. The company has denied it is closing its stores in the country. We apologise for the error.