Kuala Lumpur office vacancy falls to 14.8% in Q2
Improved leasing momentum and limited prime, green-certified space may support rental growth, although 2.64 million sq ft due by end-2026 could lift vacancy to 16.4%.
Kuala Lumpur office vacancy fell 0.4 percentage point quarter-on-quarter to 14.8% in Q2 2026, with 250,000 sq ft absorbed and no new completions.
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Net absorption reached 250,000sq ft during the quarter.
Kuala Lumpur's office market recorded steady leasing activity in the second quarter of 2026, with 250,000 sq ft of net absorption and vacancy improving in the absence of new completions, according to JLL.
JLL said automotive and fintech companies drove quarterly absorption, while the market is expected to strengthen in the second half as pipeline transactions conclude.
With no new office completions during the quarter, the overall vacancy rate fell 0.4 percentage point quarter-on-quarter to 14.8%, signalling improved leasing momentum without additional competing supply.
JLL expects the 2026-2030 development pipeline to support rental growth as the availability of prime office space, particularly green-certified buildings, remains limited. The consultancy said the Malaysian Digital Location Recognition framework could accelerate the differentiation between premium and secondary buildings by establishing formal standards for technology readiness and ESG alignment.
Average office rents edged up to RM6.88 per sq ft per month in Q2, from RM6.86 previously, with increases recorded across several submarkets, particularly established locations such as TRX and Bangsar South.
Investment activity remained subdued and was largely driven by domestic buyers. JLL highlighted the RM45 million acquisition of Menara Liberty and the adjacent Menara Liberty Annex by ICE Holidays Sdn Bhd, a subsidiary of Golden Destinations Group Bhd, from Liberty General Insurance. The properties are intended to consolidate the company's operations at a new headquarters.
Looking ahead, JLL expects Kuala Lumpur to add 2.64 million sq ft of office space by the end of 2026, which could push vacancy to 16.4%. Despite the incoming supply, the consultancy expects premium locations and buildings with future-ready specifications to outperform as occupiers increasingly prioritise quality.
Older office buildings, meanwhile, are expected to face growing competitive pressure as the flight to quality intensifies.