Office supply increased greatly in 2024, with new purpose-built office (PBO) completions exceeding demand. New PBOs offer high quality space with higher rents ranging from RM4.00 to RM5.00 per sq. ft. The older PBOs offer lower rental rates, but tenants are seeking office space with better quality. Hence, new PBOs could encourage tenants to relocate. Older PBOs are refurbishing or upgrading in effort to compete with newer PBOs. Many business operators remain in commercial shop offices due to their nature and lower rental cost. Johor Bahru has rapid expansion of co-working spaces with Infinity 8 holding the largest market share (44% market share), followed by International Workplace Group (IWG) holding 11%, and Common Ground (5%). The expansion of co-working operators into new PBOs and commercial shop offices due to the high demand of dynamic business environment. Despite the lower initial capital expenses, the space offers high-speed internet, community activities, F&B options. These spaces also provide shorter rental terms, so companies can adapt to changing business needs. Iskandar Malaysia’s proximity to Singapore allow business and workers to connect and collaborate. Many Singaporean business rent PBOs and shop offices in the area, creating a new competitive market and working demand. The demand for office space remain strong as the economy and infrastructure improves. Market Summary Report Office Development Locality Est. NLA (sq. ft.) South Tower @ Mid Valley Southkey Johor Bahru City Fringe 327,000 Menara Bank Rakyat @ Coronation Square JBCC Johor Bahru City centre 550,000 UMCity Premium Corporate Office Tower Medini 110,000 Total New Supply 987,000 Location Building Average Asking Gross Rent (RM/sq. ft./month JB City Centre and Fringe Older PBO 2.0 to 3.5 New PBO 4.5 to 5.0 Medini/Puteri Harbour New PBO 3.0 to 3.5 Market Share for Co-Working Operators (sq. ft.) Others 32% Infinity B 44% Men Inn Work 4% Common Ground 5% IWG 11% MSC Cyberport 4% Source: CBRE | WTW Research & Consulting 1 ABOUT US 19 2 BUSINESS OVERVIEW 3 SUSTAINABILITY STATEMENT 4 CORPORATE GOVERNANCE 5 OTHER INFORMATION 6 FINANCIAL STATEMENTS
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