Over 1.2m sq ft of new retail space to open in Kuala Lumpur by end-2026

Thanks to 118 Mall and Ombak KLCC.

By year-end, City Centre is expecting 1.27 million sq ft NLA from 118 Mall and Ombak KLCC, according to a report from JLL. Significant suburban supply is also anticipated covering KL Midtown, Sungai Buloh and Putrajaya.

“Vacancy rates declined in both submarkets in Q1 2026. City Centre vacancy stood at 9.4%, supported by near-full occupancy in prime malls. Suburban vacancy fell to 18.3% as anchor tenants and large-format retailers absorbed significant space in major malls,” the report added.

Here’s more from JLL:

Leasing demand remained strong with Zara’s flagship expansion showcasing new global concept at Suria KLCC, international debuts from Korean TOPTEN10 and Thai Gentlewoman at Sunway Pyramid, alongside growing demand from collectible toy and experiential retail concepts.

Consumer confidence remained robust with Malaysia’s IPSOS Index at 59.9, while January retail trade grew 6.1% y-o-y to MYR 70.2 billion. Stable employment and festive spending supported retail demand, with Visit Malaysia 2026 particularly benefiting City Centre.

City Centre rental rates edge higher while Suburban rates remain stable

City Centre recorded marginal rental growth, supported by improved occupancy in previously lower-performing malls, resilient leasing demand and elevated tourism activity benefitting prime locations and established assets.

Suburban rental rates remained stable despite ongoing supply pressure from previous completions and vacant spaces in underperforming assets. The investment market remained subdued with no notable transactions recorded in Q1 2026.

Outlook: Demand is expected to remain stable amid supply influx

Supply pressure is expected to intensify across both submarkets. However, net absorption is anticipated to remain positive supported by resilient demand from international and local retailers in key sectors such as F&B, fashion, and experiential concepts.

Retail demand is expected to be supported by Visit Malaysia 2026, which targets 47 million tourist arrivals. Consumer spending is anticipated to remain positive with low unemployment, elevated consumer confidence, and continued government cash aid programmes.