WCT’s Paradigm Mall reshuffles tenants

KUALA LUMPUR (Aug 10): The departure of 53, or 18%, of tenants in WCT Holding’s Paradigm Mall has left behind vacancies that have yet to be taken up in the mall’s first wave of tenancy renewals since it opened for business about three years ago the digitaledge Daily reported today.

WCT Malls Management Sdn Bhd, the mall’s manager, however, seems unperturbed by the drop in about 8% of its nett leasable area in a retail market that is being choked by low sales as consumers remain low-spirited.

“[It] is a common process undertaken by mall operators and usually occurs every two to three years. A total of 53 units out of 289 units closed at the end of May 2015 due to the expiry of their tenancy tenure,” said Vincent Chong, the general manager of WCT Malls Management in an email reply to the digitaledge Daily.

“However, while we are looking for new tenants, we are also trying to renegotiate with our 53 former tenants to bring them back” said Chong.

Chong believes that a replacement rate of 5% to 10% of non-performing tenants would be quite healthy to “freshen-up” the mall in terms of improving the tenant mix and would actually continue to draw consumer traffic.

“During this tenancy renewal and signing-up process, the mall would have the opportunity to review and revise its tenant mix in order to better cater to the needs of our visitors and shoppers” Chong added.

Meanwhile, Retail Group Sales Malaysia has cut its retail sales growth forecast this year for the third time to 4% from 4.9% as it foresees consumers cutting down on their expenditure on higher costs of living, coupled with its expectations of higher retail prices on a weaker ringgit and higher costs of doing business in the second half of the year.

Paradigm Mall is one of three retail mall assets currently under WCT’s investment properties portfolio. The group has previously announced its plan to spin off these assets into an estimated RM2 billion retail-based real estate investment trust (REIT).

But on May 19, WCT deputy managing director Goh Chin Liong said the original plan seemed unlikely to be realised this year, due to the more cautious market sentiment. Then on Aug 6, group managing director Peter Taing Kim Hwa told reporters that the initial public offering will take place by this year end.

Going forward, the REIT will be poised to house the new Paradigm Mall in Johor Bahru (Paradigm Mall JB), which is expected to be operational by September this year, and WCT’s Bandar Bukit Tinggi Aeon Shopping Mall in Klang and the Gateway Mall In klia2.