Kuala Lumpur Grade A warehouse supply hits 36.8m sq ft

Development activity remained subdued throughout the last quarter of 2025.

Malaysia’s Grade A warehouse market regained momentum toward the end of 2025 as tenant confidence returned following greater policy clarity and improving trade conditions, according to a market update by JLL. Vacancy declined to 5.7%, down from 6.3% in the previous quarter, reflecting stronger absorption and a stabilising industrial and logistics environment.

In its analysis, JLL noted that renewed activity was partly supported by clearer direction following the August 2025 tariff announcements, which enabled occupiers to firm up expansion and relocation plans. Companies from the logistics, automotive, medical and electrical and electronics (E&E) sectors were the primary drivers of activity. The consultancy highlighted a pronounced flight-to-quality trend, with many occupiers relocating from ageing facilities to newer, higher-specification buildings across established industrial corridors.

JLL reported that no new completions were recorded during the quarter, keeping total Grade A warehouse stock at approximately 36.78 million sq ft. Development activity remained subdued, with existing availability largely supported by earlier 2025 deliveries. Among the key completions this year were projects at Pulau Indah Industrial Park, which added around 359,000 sq ft, and a 1.2 million sq ft facility in Shah Alam by Daiwa Malaysia, both located within core logistics corridors. According to JLL, these projects continue to anchor supply in strategic locations.

On the pricing front, JLL observed that rental rates remained broadly flat quarter-on-quarter but declined 0.6% year-on-year on a net effective basis. The firm attributed this to landlords — particularly those with older assets — adopting competitive pricing strategies and offering extended rent-free periods to maintain occupancy and defend market share.

Despite competitive leasing conditions, JLL underscored that investor confidence remains intact. Capital values increased marginally from MYR 372 per sq ft to MYR 374 per sq ft, while Grade A warehouse yields compressed by three basis points. JLL stated that this yield compression signals sustained investor appetite for modern, well-located assets amid ongoing flight-to-quality dynamics.

Looking ahead, JLL expects infrastructure and supply chain diversification trends to further strengthen market fundamentals. The East Coast Rail Link (ECRL), which reached 89% overall completion as of the fourth quarter of 2025, is projected by JLL to significantly enhance connectivity and reinforce Malaysia’s regional trade role. Additionally, the firm noted that China Plus N diversification strategies are likely to continue driving demand for logistics and industrial space. Supported by investor-friendly policies and Malaysia’s strategic location, JLL believes the sector is positioned for steady, long-term growth.