The Greater Kuala Lumpur office market is expected to face a tightening supply environment from 2027 onwards, with only one non-strata Grade A office development currently scheduled for completion during that period.
According to JLL Malaysia’s head of office leasing advisory, Quiny Lee, the only confirmed project in the pipeline is The Capitol at Bandar Utama, Petaling Jaya, due for delivery in 2027. No additional Grade A office buildings are expected to be completed in 2028, signalling a significant slowdown in new supply.
Speaking at JLL Malaysia’s 4Q2025 property market briefing, Lee explained that developer caution remains a key factor behind the limited pipeline. Office development decisions are heavily influenced by investment returns, and current rental levels and yields are still less compelling compared to other property segments.
She added that local leasing practices also affect development strategies. In Malaysia, office tenancies are typically structured around short-term leases averaging three years, rather than long-term commitments. This shorter lease profile increases income uncertainty, making developers more conservative when planning new office projects.
Much of the office space planned before and during the pandemic has already been completed, resulting in a thinning development pipeline in the coming years. As a result, supply constraints are gradually placing upward pressure on occupancy and rental levels.
Early signs of this shift are already evident. In 2025, average achievable office rents in Greater KL reached RM6.81 per sq ft per month, reflecting a modest 0.33% increase year-on-year. While rental growth remains measured, the trend suggests improving fundamentals, particularly for well-located Grade A assets.
With limited new supply and sustained occupier demand for high-quality space, the Greater KL office market is increasingly expected to move in favour of landlords. This is likely to translate into more stable rental levels, fewer incentives, and stronger negotiating positions over the medium term.
Demand for quality office space remains healthy across both Kuala Lumpur city centre and fringe areas. In 4Q2025, net absorption across the Greater KL office market reached approximately 430,000 sq ft, driven by strategic relocations, consolidations, and upgrades by corporate occupiers.
This momentum has contributed to declining vacancy rates across all submarkets. Vacancy stood at 18.6% in the city centre, 6.7% in fringe locations, and 22% in decentralised areas, reflecting stronger take-up in well-connected and amenity-rich zones.
Locations such as office space in Bukit Jalil and established business hubs in Petaling Jaya continue to attract occupiers seeking modern specifications, accessibility, and proximity to talent — trends that also support demand for nearby commercial property in KL.
In contrast, older office buildings and properties in less strategic locations are expected to face ongoing competitive challenges. According to Lee, landlords of such assets may need to invest in refurbishment, space reconfiguration, or more flexible leasing structures to remain relevant in an increasingly quality-driven market.
From a broader property perspective, the tightening office supply complements wider trends across the Klang Valley, where improved infrastructure and limited new developments are also supporting demand for industrial land in Selangor, industrial property in the Subang area, and factory developments in Puchong — particularly as businesses prioritise integrated locations that combine office, industrial, and logistics functions.
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