61 ANNUAL REPORT 2022 4. OFFICE A bout 5.4 million sq. ft. of purpose-built office (PBO) space supply is recorded in Iskandar Malaysia (IM), of which about 35% is vacant. Few major tenant movements were noticed especially due to shifts in business models between occupying co-working spaces and physical offices. About 176,000 sq. ft. of vacant spaces in Menara Jland, Medini6 and Medini7 were occupied in 2022. The competitive landscape has intensified with competition between older and newer PBOs to retain/attract tenants. M eanwhile, average gross rentals remained steady ranging from RM2.30 to RM3.50 per sq. ft. per month for older buildings, and RM2.80 to RM4.00 per sq. ft. per month for newer buildings. O n the upcoming supply, the Certificate Of Completion and Compliance (CCC) was delayed for MidvalleySouthkeyoffice towers as the Mechanical & Engineering (M&E) and interior architectural works remained uncertified. The development offers 323,000 sq. ft. of space and an asking rental of about RM4.00 to RM4.50 per sq. ft. Menara Bank Rakyat @ Coronation Square in Johor Bahru City Square, Sunway Big Box office towers are currently under construction while Medini10 is still awaiting construction resumption. A s more businesses are investing in digitizing their operations and implementing hybrid business models, demand for coworking space in Iskandar Malaysia is increasing. To date, there are about 27 co-working space operators in Iskandar Malaysia, of which 60% are located in shop office buildings and 31% are in PBO developments. Office Development Expected to be Completed in 2023 Development Location Size (sq. ft.) Menara Bank Rakyat @ Coronation Square,JBCC Johor Bahru City Centre 550,000 MVS South Tower MVS North Tower JB City Fringe JB City Fringe 323,000 323,000 Sunway Big Box Office Iskandar Puteri 180,000 6.0 4.0 2.0 0.0 50% 40% 30% 20% 10% 0% Supply of PBO in Iskandar Malaysia Supply (million sq.ft.) 2016 2017 2018 2019 2020 2021 2022e Total Private Space Abbreviation: sq.ft.- square feet Source: CBRE WTW Research Vacancy Rate (%) (Extracted from CBRE/WTW Market Outlook Report 2023) MARKET REPORT SUMMARY
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