- 4 months ago
Malaysia’s office market isn’t in decline, it’s in reinvention mode.
With Budget 2026 introducing carbon tax measures and extending Green Investment Tax Allowances (GITA), the next wave of value creation lies in retrofitting, reusing, and rethinking how we work.
NIAGA Spotlight features Stephanie Ping, CEO & Co-Founder of WORQ on scaling sustainable coworking and turning unused floors into ESG-aligned assets. Phang Sau Lian, Senior GM, Sunway Malls — on how coworking is reviving mall ecosystems, boosting weekday footfall, and reshaping property ROI.
With Budget 2026 introducing carbon tax measures and extending Green Investment Tax Allowances (GITA), the next wave of value creation lies in retrofitting, reusing, and rethinking how we work.
NIAGA Spotlight features Stephanie Ping, CEO & Co-Founder of WORQ on scaling sustainable coworking and turning unused floors into ESG-aligned assets. Phang Sau Lian, Senior GM, Sunway Malls — on how coworking is reviving mall ecosystems, boosting weekday footfall, and reshaping property ROI.
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NewsTranscript
00:00Hello and welcome to Niagara Spotlight with me Tamina Kaosji. Niagara Spotlight takes us to the
00:14week in economic analysis as well as future affairs. And now this week on analysis, Spotlight
00:20is clearly on Malaysia's office space renovate reinvention. Now to set that all within the frame
00:27also of the recent budget 2026, it actually did set the tone for more disciplined, sustainability
00:33driven economy. The next big shift of course will be a carbon tax rollout in 2026 which will actually
00:40be making retrofitting and reusing of existing buildings far more valuable than tearing down
00:45and rebuilding from scratch. For Malaysia's property sector that is a turning point and a very
00:52interesting one. Incentives such as the Green Investment Tax Allowance, GITA, extended until
00:57the end of 2026 now reward energy efficient upgrades and ESG compliant assets as well, exactly where
01:05innovation and workspace design is also taking place. Now there's also JLL's latest data showing
01:12that Kuala Lumpur's office vacancy eased to about 19% as tenants are also gravitating towards higher
01:18quality, flexible spaces. We're looking at reinvention, not so much rent cuts as a new
01:24strategy. So today, taking all of that into consideration, on Niagara Spotlight, we're exploring
01:29how two key players within the space are turning underperforming square footage into ESG-aligned
01:36revenue-generating value. Welcome to the studio today, Stephanie Ping, CEO and co-founder of
01:42Work, to discuss Work's upcycle co-working model. Together with Pang Sao Lian, Senior General
01:48Manager of Sunway Malls Kuala Lumpur, with more about Sunway Malls Asset as Ecosystem Strategy.
01:54A very good morning to the both of you. Thank you so much for making time.
01:57Good morning. Thanks for having us.
01:59Wonderful. So Stephanie and Pang, I will get started with the discussion perhaps by referring first to
02:05Stephanie to tell us a little bit more spacing this within the scaling versus saturation arena.
02:11So when it comes to works plans, you're going big guns. Around 450,000 square feet of co-working space
02:19by the end of this year, which is very soon. We're already in Q4. And you're also looking towards
02:24managing around 1 million square feet by 2030. So of course, looking at Clang Valley office vacancy rates,
02:31how are you evaluating risk within this space? Well, I think when it comes to saturation,
02:39we are really not quite there yet at all, because this is at the infancy. I wouldn't say it's infancy,
02:46but it's, you know, maybe toddler stage of the industry at the moment. Because if you look at the numbers,
02:53our penetration rate in Malaysia at the moment is probably about, last I checked was 1% by now,
02:59maybe more than 1%. And a lot of the average penetration rate in the Asian cities are at 3%.
03:08At current rates, 3 plus. And it could go up to, you know, 10% quite easily. And so we have a long
03:16way to go. So in terms of having, you know, oversaturation, I wouldn't say we're really worried
03:23about that at all. And we've got a lot of space to grow into. If you notice, we're very disciplined.
03:29We will definitely go to the other cities. But we are still only in KL, because in KL,
03:35there's still a long way to go of building even more spaces, which is where that 1 million square
03:42feet number is coming in. We're actually now, you know, if my numbers are right, then if not the
03:50biggest, then one of the biggest here in Malaysia. So even at that stage, there's still a lot to go to.
03:57This side of town in Bukit Chale, we don't have any, and a lot of other parts of Klang Valley as well.
04:04So I want to say saturation is that much of a problem as of yet.
04:08So not really a problem as of yet, but also still staying relatively
04:13conservative for the immediate long term, because we're looking at Klang Valley still, right?
04:18We're actually looking at other cities. And when we say other cities, we don't just mean Penang
04:23and Johor. We also talk about, you know, what do you call it, Ipoh, even smaller towns, Melaka,
04:33or even Kuantan. We go wherever there are entrepreneurs, wherever there are businesses,
04:38and our model will fit into those cities as well. It's just that because there's still so much more
04:43to go in Klang Valley, then why not just, you know, continue to expand into that market, which
04:50is comes to my point of like penetration rate in terms of it having to add saturation rate,
04:55it's not there yet. And that's where things are in terms of the office market for us.
05:01Fantastic. So I think this is a perfect segue actually, Peng, to go dig deep into Sunway Malls
05:07approach and the fact that also Sunway Malls has started now integrating solidly co-working into your
05:13mall assets. And how was this organically, in a sense, also came to fruition in the post-pandemic
05:21return to work timeframe that you were mentioning as well?
05:26Okay. Probably let me start off with some of the numbers from this NAPE, the National Property
05:32Information Centre. Recently, they have released the latest quarter report. It shows that for
05:37Malaysia shopping malls industry, there is about 20% vacancy in the malls, in the malls or commercial
05:44buildings. Total occupancy is 80, average is about 80%. So that's 20% vacancy. So that's
05:51why for shopping malls, I think this is a good positioning, repositioning strategy to fill up the
05:57vacancy. So that's why co-working space actually is a good strategy to fill up those vacancy or
06:03underutilised space, including those space while waiting for the next enhancement project, transitional
06:12occupation period. So it's a good fill up. It's to help us to fill up the gap of this occupancy in a
06:20mall. And on top of that, it will help to generate revenue because it's a business model. Whether it's
06:27a fixed rental or a revenue sharing, there'll be an income rather than leaving it vacant. So on top of
06:33that, the most important is the footfall. Absolutely. There's a lot of footfall erosion as
06:39well. Yeah, you'll have to bring in the footfall. Online shopping, more malls. Correct. We need more
06:43footfall to the mall because nowadays the online shopping is very competitive. So that's why for
06:48physical brick and mortar mall, we need footfall, physical footfall. So co-working space can help to
06:55bring in footfall. And on top of that, spend. They activate the space and at the same time also can
07:00generate more sales activity in the mall. Exactly. So it's sounding like there is also
07:06the positioning of co-working spaces as being a sort of a weekday engine inside a weekend asset where
07:13of course all malls are crowded, people want to come out and take their leisure time. So these kind of
07:19performance indicators which Sunway Malls has also been tracking because of the work component. Can you
07:26tell us perhaps a little more in detail like what kind of time do people actually spend their dwelling
07:34time while they're inside the mall which may be related actually to the co-working spaces activity?
07:39For Sunway's property, most of our development is an integrated model. It comes with shopping malls,
07:45commercial office, residential, all this. So that's why I said today we have two locations with work.
07:52One is at the Sunway Velocity 2 office building and the other one is at our Sunway Putra Mall,
07:59inside the mall. So it has been working very well because it helped to drive footfall, activate the
08:07underutilized space. And we can track because we do have this shoppers tracking system to track how many
08:14people coming in. And if I look at the performance of work in our property, currently I think the occupancy
08:21was quite good. I think above 88%, close to 90%, it's very full. That is very promising.
08:28Yeah, in fact, we are very happy because I think there's room for future expansion. For shopping malls
08:35usually space is quite limited. But again, most of our integrated townships are actually well
08:42connected to office tower. So that also allows the future expansion from mall to the office building.
08:49Yeah. And also our development is also very close to the transport hub.
08:56Yeah, so I think it's also one of the probably important factors for work to consider because
09:03it's very convenient for all these gate workers to come. It's like how Ms. Bang said, it's an integrated
09:09development. So even though in the Sunway Velocity location, we are in the office space, we work with
09:18the mall side, her team at the mall to have partnerships with the retailers over there
09:25to bring in the community both to the building, discounts for the food retailers, for our customers
09:32and so forth. So it's actually very, even in the way we work with each other as landlord and as a tenant
09:38or a partner, it's very integrated in how we do business with each other.
09:44Exactly. Because it's also about shifting the idea around malls as a place to buy things, but also as
09:51a place that people just are at, a place to be, right? So all of these value activators that a partner
09:57like Work brings in, we're talking about the fact that you are able to have these kind of agreements
10:04with existing property owners who are already on board. What would be perhaps the value proposition
10:11to those who are more conservative when it comes to thinking about their empty retail spaces? But
10:21perhaps what would you pitch them if you wanted them to get on board? Well, I mean, I think this is a test
10:26case to see whether it is something that is viable. And you've heard Ms. Pang say that there's
10:31expansion opportunity, which means it works. And we track that with, you know, Sunway and our other
10:37existing landlords that we have this program with. And ultimately what they see is the hard aspect and
10:44the soft aspect. The hard aspect is very simple. We increase the yield or the rental per square feet
10:51for them in that space by way of a kind of financial agreement that they, you know, invest something into
10:59the space, but they expect to get a return that is above what they normally would get. So we would pay
11:06because you're taking up a considerable amount of square footage as well. Yes. At the same time,
11:12because they're also investing into what it takes to build out that space, they expect to get sort of
11:20higher yield in a sense. And that's what we do give the landlord. So in terms of increasing the financial
11:29payback to them, that's an easy one. But at the same time as well, what they see is that we increase the
11:34footfall. And these are not just footfall being people going into the mall to spend money and use
11:39it. These are people who once they're in there, they become friends, business connections. They
11:46actually have a whole localized community over there, which is very robust and help people become
11:53successful in their business. And that attracts the community in the vicinity to come to their mall,
11:59gives it a brand. This is where you go to meet people like a rukun tetangga for businesses. Sure.
12:05And it doesn't just bring in local community. It brings in, I would say from all four corners of
12:12the world, because if you go to Ms. Mung's mall, I say it's kind of her mall. She takes so much
12:18ownership. It's like her baby. Very cosmopolitan. Very cosmopolitan. It used to be, I hang out at a
12:25mall. I love that mall. And a lot of our team goes to that mall. And it's a mall that is really,
12:30really good for the local people who is wanting a whole range of experience at their price point as
12:40well. Nowadays, though, we see when we're in that space, we hear a lot of accents from all over the
12:49world, in our space. And these are the digital nomads who have now discovered this mall as a
12:55place that they want to be and want to hang out in, because there's a community there. So we're
13:00bringing the whole foreign international crowd into this space, when it used to be super robust as a
13:07mall for the locals. And now there's a whole mix of another crowd, which is the digital nomads really
13:13love it. And I would like to call it like a mini Bali over there, with all these people like clacking and
13:18working, making income from other sources, but then calling it a home because of the trains,
13:24because of the eateries, because of all that stuff. But still situated spatially in Malaysia.
13:28Fantastic, Stephanie. So probably I also would like to add on to this, I mean, actually two more
13:33value that can be added from this is actually for the co-working workers or the entrepreneurs or
13:40professionals there, it actually, they will find our place is like, they can find work-life balance
13:46because they can just, after work, they can just go down to the mall for karaoke or for movie
13:51and for dining, all these experiences. And one very important point is also the, in the mall,
13:59we do have a lot of all the pub and mom store, all these small retailers. Sure, who have been there
14:03for decades sometimes. Yeah, they don't have all this once experience in all kinds of functions. So
14:09they are very much focused on their sales activities. But today, with all these online competitions,
14:14I think if they are not improving, their business will be struggling. So I think with the
14:19co-office spaces nearby, it actually can complement their business model. I mean, imagine this pub and
14:26mom store, if they don't know how to do social media marketing, they can actually find all this
14:32support from freelancers, all these more entrepreneurs where they can work together and grow their business.
14:39I think this is another, another ready, I would say the ready workforce available in a mall to support
14:46all these pub and mom retailers. Yeah, footfall with connection. Yeah, footfall with connection.
14:51I love the idea of that. So thank you so much for the conversation so far. We take a very quick break.
14:56Don't go anywhere. We'll come back with the rest of looking, of course, at reinventing Malaysia's
15:00commercial spaces in just a tick on Niagara Spotlight.
15:25Welcome back to Niagara Spotlight. Still with me Tamina Kausjian. Today, of course, we are discussing a
15:29very pertinent topic in light of, of course, the Budget 2026 announcements looking at Malaysia's
15:34office space reinvention together with Stephanie Peng from work and Pang Salian of Sunway Malls, Kuala Lumpur.
15:41So, Pang, I wanted to dig a little bit deeper into looking at operational alignment when, of course,
15:47traditionally, the mix was more towards your stronghold F&B, retail, entertainment and that kind of
15:55lease stability. So, what kind of SOPs or structures do you have in space now to ensure that it's still
16:03all aligned even with newer, more invigorated leasehold tenants like work, for example? A few things that we
16:11need to focus when we decided to work with the co-office space because more operate from 10 to 10, 12 hours a day.
16:20But for co-working space, I believe it's 24 hours. Your members may come back to office anytime.
16:25And that's the hook, right? At least for the co-working spaces.
16:28So, that's why we have to look into the locations, the accessibility. So, it would be ideal if we can have a
16:35direct access. That means for, from the co-working office space, they don't need to go through, their
16:40members don't have to go through the mall, from the main mall entrance to the mall, then go to the
16:46office space. If we can have a direct access, for example, the leave access from the external or from
16:52the car park directly to the space near the office, I think that would be ideal. Of course, also, because of
16:59this odd working hours, so we can't provide the aircon system 24 hours. So, what we need to do is we
17:06will advise work to have their own ASU units or their own aircon suite unit system. So, it will allow
17:13flexibility because otherwise there will be a lot of wastage in terms of all this electricity. So, other
17:19than that, it's like toilet have to be nearby so that they won't loiter around midnight, late night kind of
17:25things. Housekeeping and also, besides of all these operational things that we need to consider,
17:35another thing is very important is one is on the financial business model. A lot of time, we work on
17:41revenue sharing. So, we have to make sure that they do well so that we can enjoy a better revenue. So,
17:47we have to work together in terms of marketing collaborations, in terms of their branding, their
17:53signages in the mall. So, we have to make sure that it's prominent so that people know how to go to
17:57them, go to their workspace and we work together. So, hopefully, they can get 100% occupancy and they
18:05also help us to improve our overall football. Exactly. So, actually, a lot of thought goes into
18:10making it quite as seamless as it is for the end customer who are the co-workers and then those who
18:15spill out into mall to access services. Stephanie, from there, I'd like to go into talking a little bit more
18:21about tenant mix as well and resilience. So, the co-working world has also learned quite a lot
18:26that it's really important to focus on more of a healthy mix and given works now network of roughly
18:33about 10 or so outlets, what is your current like occupancy and tenant mix breakdown? If you wouldn't
18:40mind giving us a snapshot. Yeah, I mean, I think we started with the smaller companies. We started with
18:47actually a lot of startups, then we have our freelancers, then we go, you know, have a very
18:51strong base with SMEs. Currently, we have about 70%, we call it enterprises, which are large teams,
18:59large companies and 30% SME. But, I believe in the future, we will move back towards a 50-50% mix
19:06with a lot of it being the smaller guys or smaller teams. And, I think that's very robust because
19:12ultimately what we supply to a lot of landlords are the small teams and the small companies that
19:19otherwise they would not have as a tenant mix in their building. You know, we're there to service,
19:27takes a lot more servicing with the smaller teams and smaller companies. They want a huge community
19:33aspect, which we have. They want to meet people, they want to collaborate because they're smaller,
19:38they have less resources. So they tend to play off of each other and kind of band together to do
19:44businesses, do like deals and business together. So that's a lot of investment into the community
19:50aspect. And that's what makes them so loyal to us. But it takes a long time to build that community.
19:57Like even throughout COVID, when things were hard for that segment, we would financially help them
20:05and pour money back into the business so they would survive during that time.
20:10They thank us post-COVID by coming back to us because they have this loyalty to us now,
20:16which took many years to build. But that when we have this loyalty and this community,
20:23it brings more of them because they talk, there's word of mouth. And so when it comes to the smaller
20:30teams, I think that's a huge kind of segment for the landlords that they would like to service.
20:36But it's too much for them to do because they have a lot more that they have to worry about in their
20:43property. So having to just partner with us is an easy way to do it. Because the partnership is really
20:49seamless for the landlord. It's really one agreement, a very small budget of their enhancement plan or
20:58their renovation budget. And they get to have all the good stuff about a business, which is the
21:04spillover effect, the increased rental, but they don't need to do the headache, which is the work and
21:09servicing and the business model of all that. And they basically get this business to be part of
21:16it to make some money from it and also all the spillover effects to their building. So it's kind
21:21of a no brainer to enter in the new market for them and also have that stickiness in their building.
21:27Exactly. And it was also interesting that you mentioned that you do foresee perhaps the enterprise
21:32mix will go down to a little lower so that it's a 50-50. So does that also mean that you generally
21:39envision enterprises going back into more traditional office spaces?
21:43So when I say percentage, I don't mean enterprise will come to us less. I just mean the whole pie of
21:51people using co-working spaces will increase and the enterprise will increase, the SMEs will increase,
21:57but the percentage will probably swing back to 50% SMEs and 50% large companies just because SMEs
22:04are such a strong base for us and such a strong base for Malaysia's economy as well.
22:10Well, enterprises of course is amazing for us. After we have gone into SMEs, the enterprises came to us
22:20because they want to be near to the SMEs. They want to be near to all these little teams.
22:25In a very non-traditional manner that actually speeds up work.
22:28Yes. Fantastic. From there, Pang, I'd love to actually have you discuss a little more in detail
22:35Sanwei's live, learn, work, play model because this is possibly one of the best ways in which it is
22:43actualised. Tell us more.
22:44Yeah. Actually, the co-working spaces actually help us to support the work pillar that we mentioned just
22:52now. The live, learn, work and play. And the rest is actually, they help us to fill up the
22:59eco, the entire ecosystem in a mall. How they, how they do that? Because, for example, like,
23:07just like Sanwei, it's also part of our mission to nurture young entrepreneurship,
23:11like what Stephanie mentioned just now. We work closely with our Sanwei University,
23:15we have iLab, we have Xfarm, all this is actually helped to cultivate all this young entrepreneurship
23:23and also this creative or sustainable business idea. So, what we did is actually, we support,
23:30we work together and this is also aligned with our Sanwei SDG commitment. Our commitment to
23:38the economic growth, especially on the gate economy and also the lifelong learning. Because
23:44through this collaboration, we actually work a lot on the learning programme, especially on the digital
23:52innovations. Absolutely. So, it does seem like the way in which it has been planned out, it is bearing
23:59fruit in under five years, which of course, would you be looking to actually collating perhaps more
24:04pilot studies or even data that can then perhaps help inform other Sanwei property decisions around the
24:11country and maybe not just restricted to Klang Valley? Yes, yes, I think if Stephanie work there,
24:19willing to explore outside the Klang Valley, I think we will have a lot of business opportunity again.
24:25Right now, in our Sanwei malls, most of our malls occupancy already above 95 percent, some is actually
24:3299 percent, close to 100 percent, so that's why. But one thing is, we do have an office tower, so we can
24:38work together a small satellite node in the mall and the bigger office space in the office tower. This
24:44is something that we can work together in outside our Klang Valley property developments as well.
24:51Yeah, I think when she mentioned partnerships, I think that's like really how we think of it. When
24:55we go into her building or any landlord's building, we start to take on the mindset that's our building as
25:01well. We have a sign there to tell everyone that we're there so that they come for meetings, for events,
25:07and then the success of that mall is really part of our success. And then we would have a lot of
25:14partnerships with the other retailers in order to have cross-functional like, you know, promotion and
25:21things like that. So really part of her community as well as she's part of our community.
25:26Absolutely. And also then perhaps to land the conversation nicely, in conclusion, Stephanie,
25:32so also one of your differentiators as work is about upcycled co-working. Tell us a little more
25:39about this, especially within the context of all things green, sustainability and the fact that even
25:44as a country, we're now even moving towards firm budgetary benefits and incentives for this arena.
25:51Yeah. So I mean, two things. One is on the ESG angle, we're on all the train lines and we've collected
25:59on the train lines. And the reason for this is definitely on the ESG angle, because people start
26:05taking trains to work now instead of cars. When we surveyed our customers, 50% of them has now started
26:13taking trains as their primary mode of transportation to work instead of cars.
26:21And a lot of people cite that the reason why they choose to be employed by the companies in our spaces
26:27is that they want this, they want to use the trains. So we're talking about a huge change in people's
26:34behavior and not even about, you know, the discussion of should we change from normal car to EV cars. I'm
26:43talking about getting cars off the road entirely. People walk to work, take the trains. And that's,
26:51I would say, is a very big driver of how the behavior of people will move towards an ESG kind of environment.
26:58And the other thing would be that, especially with this site, with Miss Bang in Sunway Putra,
27:05it's an upcycled site in a sense. It was an old, another space. And we did not do a lot of demolition
27:12work. We reuse what was in there. We used the thought to kind of re-change and update the space to be
27:19what it is today. And as a result, we spent 70% less capital expenditure on the space, saving money,
27:25saving materials. And we made it into what it is today, which people appreciate, especially digital
27:32nomads really like that story. It resonates, of course, with the overall sustainability element
27:38of work style. That's right. Fantastic. Stephanie, as well as Pang, thank you so much for this most
27:43interesting conversation that helps actually anchor us around really new realities for the working
27:48crowd and also for those who are now frequenting malls. It's been a pleasure. Thank you. Thank you.
27:52Well, Malaysia's office market isn't shrinking. It's actually shedding its old skin. And the winners
27:58will be those who are treating this space as an ecosystem, not just a standardized lease.
28:03Well, that's all we have time for today on Ag Spotlight with me, Tamina Kausji,
28:07discussing the office space reinvention all around Malaysia. Here's to a productive week ahead.
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