This article first appeared in City & Country, The Edge Malaysia Weekly on October 3, 2022 - October 9, 2022
As businesses around the world change the way they operate to be more environmentally and socially conscious with good governance, industrial parks are following suit to ensure they are able to deliver on these expectations.
Compass @ Kota Seri Langat (Compass) is one such industrial park. AREA Management Sdn Bhd chairman Datuk Stewart Labrooy updates City & Country on the project’s progress since it was reported in November last year and officially launched on Aug 25 this year.
To recap, the 220-acre freehold Compass is situated within the 2,600-acre master development of Kota Seri Langat by Seriemas Development Sdn Bhd, a wholly-owned subsidiary of Permodalan Nasional Bhd (PNB).
PNB, via its indirect wholly-owned subsidiary MIDF Property Bhd, along with KWEST Sdn Bhd — a wholly-owned subsidiary of Kumpulan Wang Persaraan (Diperbadankan) (KWAP) — and AREA Group of Companies signed a joint-venture (JV) agreement to develop Compass.
“When we started to conceptualise the ‘industrial park of the future’, we did it at a time when climate change and its effects on the environment were becoming a key concern for investors globally,” says Labrooy. “Environmental, social and governance (ESG) issues have shot up the corporate, social and political agenda over the past 18 months; ‘ESG’ is now the acronym of the day, and the need to align business models with these concerns has never been greater.”
Compass, which has a gross development value of RM1.2 billion, provides businesses with ready- and custom-built factories in two sections of the industrial park: Compass SME Precinct, and Compass Industrial and Logistics Hub.
Compass SME Precinct sits on 58.84 acres and will offer ready-built factories ranging in size from 1,200 to 50,000 sq ft. There are 81 units, targeting small and mid-sized
businesses. There are low-cost types (19 units, built-up: 1,200 sq ft), terraced (seven units, built-up: 3,600 sq ft), detached (18 units, built-up: 13,000 to 48,000 sq ft), semidee (22 units, built-up: 12,000 to 15,000 sq ft) and hybrid cluster (15 units, built-up: 8,000 to 17,000 sq ft) factories. The selling price ranges from RM1.5 million to RM22 million.
The hybrid cluster factory unit is made up of a detached factory and semidee factories separated by a party wall. All factories have dual entry and each factory can be acquired individually.
Labrooy shares that to date, about half of Compass SME Precinct has been taken up, with the completion date for this portion of the industrial park slated for 2024.
Compass Industrial and Logistics Hub sits on 161.22 acres and offers custom-built factories as per the customer’s requirements. Factory sizes will depend on what the customer wants, but can range from 100,000 to one million sq ft. Labrooy reveals that one major client from the food industry is considering 28.9 acres for its custom-built premises.
As ESG matters continue to grow in prominence, it is essential that businesses comply with the regulations and public sentiment, especially that of investors and shareholders. Additionally, financial institutions, Labrooy points out, are becoming reluctant to lend to non-ESG-compliant companies.
“We at AREA are no strangers to the design and development of industrial parks, having spent the last seven years rolling out Johor’s most successful industrial park to date: i-Park @ Indahpura, a JV with AME Group. It provided us with an excellent template and many lessons on what brings success to such developments,” says Labrooy.
Prior to launching Compass, Labrooy highlights that the first task was to find out what was needed.
“Before we started the design, we conducted a comprehensive market study of the Greater Klang Valley with a focus on what products existed in the market, and more importantly, what customers were looking for. Turns out no one really asked them [the customers] what they wanted.
“The feedback we were getting was that industrialists and small and medium enterprises (SMEs) that were export-oriented, or part of a supply chain to multinational corporations (MNCs) that were manufacturing in Malaysia, were now being scrutinised by their clients, buyers or shareholders as to their compliance with ESG.
“Earlier industrial estates were largely unplanned and grew organically with scant attention to issues like workers’ accommodation, energy efficiency, effluent discharge, water conservation and renewable energy strategies,” he says.
With market research feedback and target market (logistics and manufacturing-based clients) in hand, Compass set out to create an industrial park to meet customer needs. This included getting certified as the first Green Certified Park by GreenRE, a green building rating tool by the Real Estate and Housing Developers’ Association Malaysia (Rehda).
According to Labrooy, “We should get certified before we hand over units to our clients.”
Three blocks with 1,000 beds each will serve as the workers’ accommodation, Labrooy says, reducing travel time to their workplace. The lodgings will be equipped with a biometric security system. Facilities include a food court, laundry service and a clinic.
“Workers should be able to live with dignity,” Labrooy says, adding that a happy worker will also lead to better productivity.
Additionally, there will be a boutique commercial area, and a park with playgrounds and sporting facilities. A business centre will also be built with a showroom, coffee shop and meeting rooms, but plans are still being finalised, Labrooy reveals. Other modern touches are energy-efficient lighting systems, rainwater harvesting systems and pre-wired electric car charging bays.
All factory roofs in the industrial park will be designed to accommodate the installation of solar panels, should clients choose to have them. Labrooy says AREA is partnering with solar panel manufacturer Cuora Solar to assist clients with installation needs at competitive prices. It has also partnered with Cheng Hua Engineering, which has expertise in industrial automation if clients so require.
To further reduce their energy use and carbon footprint, buildings are built in a north-south orientation to reduce heat load. As Compass SME Precinct is adjacent to the Compass Industrial and Logistics Hub, this helps shorten the supply chain route between complementary SMEs and MNCs.
Compass, which sits 12.8ft to 13.5ft above sea level, is equipped with flood mitigation measures such as 20ft monsoon drains that feed into a large retention pond. In addition, the industrial park is connected to major highways via the West Coast Expressway (WCE) that intersects with the Shah Alam Expressway (KESAS), South Klang Valley Expressway (SKVE) and New Klang Valley Expressway (NKVE), which are linked to Northport and Westport, as well as the Kuala Lumpur International Airport (KLIA).
Interchanges from WCE to the park have also been planned, making access much easier for all stakeholders and users.
Labrooy takes pride in the design of the factories, which is different from many others, particularly in the Compass SME Precinct.
“We avoided the cookie-cutter design for semidee factories with lopsided office-to-warehouse proportions which is very often repeated and sold on plot ratio and not on functionality,” Labrooy says, adding how some factories had too much office space compared to warehousing space, resulting in buyers not being interested in the product.
“We wanted end-users [that is, owner-occupiers] as clients and not have a repeat of what we see in Johor, where a huge volume of identical products is constructed for sale to investors with a resulting occupancy of only 40% to 50%,” he says.
Currently, basic infrastructure — such as roads, drains, water mains, sewage treatment plant and pump house, street lighting and Tenaga Nasional substation — is being put in place on Compass grounds. As Compass slowly attracts more interest, thanks to its targeted marketing strategy using traditional and social media, Labrooy has a positive outlook on the industrial property sector.
“If you read the papers these days, you will see several major Malaysian developers starting to pivot to the industrial space, which I welcome. The more ready-to-develop land we have to offer, the more successful we will be in attracting FDIs (foreign direct investments).
“Research by CBRE shows another 138 million sq ft of additional [industrial] space over the next five years and that doesn’t include the huge potential for manufacturing projects. In Malaysia alone, e-commerce expanded to US$6.29 billion in size with 14.4 million users in 2021. In 2025, it will be US$18.3 billion in size with 18.3 million users.
“The market is responding to industrial projects in a positive way, but I still feel that state governments have to be invested in developing the sector. One of the best models I have seen for this is Kulim Hi-Tech Park,” he shares.
Labrooy says that plans are afoot to expand the current Compass park.
“We intend to work with our JV partners, PNB and KWEST, to expand the park to about 600 acres and create the next Shah Alam for Selangor.”
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