Kuala Lumpur net office absorption hits 560,000sq ft in Q3

There were notable movements in the healthcare sector.

According to a JLL report, office demand in Kuala Lumpur improved with net absorption of 560,000 sq ft (Q2 2025: 430,000 sq ft). Nevertheless, the tenant decision-making process remained slow and cautious due to the recent SST hike and global policy tension.

“Significant movement occurred within the healthcare sector, especially in the KLF and DC areas, with tenants considering proximity to manufacturing sources, local catchment areas and competitor locations as key factors in their relocation decisions,” the report said.

Here’s more from JLL:

There were three new office buildings, with 1.37 million sq ft, across submarkets. No future developments are scheduled in 2027 and 2028, creating an absorption window to support rent stabilisation and upward pressure due to the scarcity of available quality space.

The overall vacancy rate stood at 16.6%, increased by 0.90 ppt due to the new completions, and tenants remain cautious with their leasing decisions.

Rent leveraging upon SST expansion

Average rent increased slightly to MYR 6.78 psf/month, reflecting robust green building demand across the submarkets. To address the compounded effect of SST expansion, landlords did not hesitate to offer attractive packages to prospective tenants.

No transaction was recorded in the quarter, as the market remained limited amongst local investors and international buyers remained cautious.

Outlook: Premium office space remains with unwavering values regardless of market fluctuation

Businesses will adopt a measured approach to space relocations, strategically timing their decisions to align with the optimal market conditions. Cost-focused tenants may increasingly favour secondary locations offering substantial rent efficiency over prime locations.

As occupier dynamics and needs continue to evolve, landlords will need to embrace innovative repositioning strategies to maintain their competitive edge and market appeal.