Modest Increase in Kuala Lumpur's Office Occupancy and Rental Rates
Kuala Lumpur's office market continues to show resilience amid challenges in the broader Asia-Pacific region, although its vacancy rate remains higher than that of its regional counterparts.
Knight Frank Malaysia senior executive director of office and strategy solutions, Teh Young Khean, said this presents a good opportunity for tenants to upgrade or reconfigure their office spaces to align with the latest trend for employment growth sustainability and talent retention.
"Overall occupancy rate and rental rates have shown a slight uptick due to positive take-up in KL City Centre, especially Tun Razak Exchange (TRX)," he said.
The real estate consultant said rental rates face some downward pressure; prime Grade A office buildings in key areas like Mid Valley City, KL Eco City, KL Sentral, and Bangsar South in the KL Fringe, as well as TRX in the city centre, continue to draw interest from new tenants and companies consolidating operations.
"The market's resilience is further supported by Malaysia's stable economic outlook, which fosters business expansion and employment growth," it adds.
According to Knight Frank, workplace strategy trends are shaping office demand across Malaysia and the region, with companies prioritising sustainability, wellness features, and hybrid-working adaptability.
"While landlords face increasing competition, those that proactively invest in improving their buildings and offering greater flexibility in lease structures will remain competitive.
"Looking ahead, we anticipate demand for high-quality office space to persist, particularly from businesses prioritising environmental, social, and governance (ESG) objectives and employee well-being," its group managing director Keith Ooi said.
In the Asia-Pacific region, the office market is expected to undergo significant transformations in 2025, with prime Grade A office space increasing by 7 per cent, up from 4 per cent in 2024.
Knight Frank said more than 40 per cent of this new supply will be delivered to mainland Chinese markets, which remain under pressure due to economic headwinds.
Christine Li, head of research for Asia-Pacific, said the rest of the region is still expected to see moderate increases of one to two per cent, with leasing volumes anchored by markets in India.
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Source: NSTP