PETALING JAYA: The abundance of retail space is forcing mall operators to experiment with new strategies to remain competitive and relevant.

Olive Property Consultants chief executive officer Samuel Tan said not all malls are enjoying brisk businesses.

“Some of them need to be refurbished or repurposed. In fact, some abandoned malls have been converted into hotels and offices.

“Some of these malls will undergo major renovations to accommodate a larger footfall. We are also seeing new shopping concepts being constantly introduced, especially within the food and beverage (F&B) sector,” he told StarBiz.

Savills Malaysia Sdn Bhd group managing director Datuk Paul Khong said malls that lacked strategic planning or modern concepts may struggle to compete and risk being replaced, as the retail landscape becomes increasingly consumer-driven.

“The retail sector is expected to remain led by top megamalls in major cities, continuously expanding their net lettable area to maximise income and attract premium tenants.”

He said these malls set the benchmark with comprehensive shopping and entertainment experiences.

“Meanwhile, new retail malls are emerging, particularly in underserved areas. However, these new entrants may face challenges, requiring several tenancy cycles to achieve stable occupancy and long-term success.”

According to CBRE | WTW in its 2025 Market Outlook, key players have experimented with various strategies to make retail malls more attractive.

These include diverse dining options, art and culture platforms, unique entertainment and sports facilities and open concept areas.

“The use of technology in the retail sector is expanding, covering shopping, payment, and delivery to meet consumer demand for convenience and enhancing the shopping experience.

“At the same time, retail malls are also evolving into spaces for various activities, including exercising, working, learning and entertainment.”

CBRE | WTW said underperforming retail malls persist in the Klang Valley, marked by low occupancy, rental and shopper traffic.

“Repurposing these spaces can be difficult due to high costs, as well as outdated building codes and strict zoning regulations.

“However, the adaptive reuse of projects like (former cinema) Rex KL and the Zhongshan building stand out as exceptions, where owners have demonstrated persistence and creative vision in overcoming these obstacles.”

According to CBRE | WTW, sustainability initiatives are gaining traction, enhancing malls as vibrant hubs for shopping and social interaction.

“Retail sales in the nine months of 2024 grew by 3.8% year-on-year and are expected to reach 3.9% for the full year, with a slight improvement anticipated in the last quarter.

“This growth is driven by the return of the Malaysia Year End Sale 2024, which began on Nov 15, 2004 and the early celebration of Chinese New Year in 2025, starting on Jan 29, 2025, with Malaysian Chinese consumers expected to begin their festive shopping in late December.”

CBRE | WTW noted that in 2024, New Ocean Fine Food City opened as the first lifestyle gourmet mall focusing on F&B with curated restaurant selections.

“The rejuvenated Semua House also reopened with a modern layout and a majority of local retailers. In Shah Alam, Elmina Lakeside Mall opened in the third quarter, anchored by Jaya Grocer. The mall has an open-concept layout and has a 98% occupancy rate.”

By 2025, CBRE | WTW said 118 Mall (0.9 million sq ft), Pavilion Damansara Heights Phase 2 (0.5 million sq ft) and 8 Conlay Lifestyle Quarter (0.2 million sq ft) are expected to open.

“Occupancy levels slightly improved to 81% (increase of 0.5 percentage points year-on-year) as of the third quarter of 2024. Tenant movements have been vibrant since early 2024, marked by significant brand debuts at The Exchange TRX Mall.

“Notable newcomers include France’s Salomon, Hong Kong’s Lukfook Joaillerie and Malaysia’s first Apple store, originating from the United States.

“Other new retail entries primarily come from the F&B and fashion and accessories categories.”

CBRE | WTW said rentals are also improving for prime malls.

“Real estate investment trust-operated retail malls reported positive tenancy renewals in 2023, recording an average gross rental of RM38 per sq ft per month in Kuala Lumpur and RM19 per sq ft per month outside of Kuala Lumpur.”