Kuala Lumpur sees nearly 3m sq ft of new Grade A warehouse space
The large vacancy overhang may temper near-term absorption, while strong demand for modern facilities could preserve premium rents and intensify pressure on older warehouses.
The Shah Alam International Logistics Hub added 2.8 million sq ft of Grade A warehouse space in Q2 2026, with 60-70% remaining vacant.
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Total market stock now stands at 39.58 million sq ft.
Kuala Lumpur's warehouse market remained resilient in the second quarter of 2026 as occupiers continued to favour modern, well-located facilities, although a large new supply addition is testing the market's ability to absorb space, according to JLL.
JLL said leasing activity rebounded following the Chinese New Year and Hari Raya periods, with demand particularly evident from the electrical and electronics, medical, automotive and fast-moving consumer goods sectors. Leasing momentum was concentrated in Grade A facilities, as occupiers prioritised modern specifications and strategic locations.
The completion of the Shah Alam International Logistics Hub in Q2 added 2.8 million sq ft of Grade A warehouse space, taking total market stock to 39.58 million sq ft. JLL said 60-70% of the new space remained vacant as leasing negotiations continued.
However, the performance of other new developments demonstrated the strength of demand for quality space. Daiwa House Phase 3 reached 70% occupancy within three months of completion, according to JLL. The broader market vacancy rate nevertheless increased to 9.9%.
Gross rents stood at MYR 2.19 per sq ft per month, up 0.6% year-on-year. JLL attributed the rental growth to premium pricing at newly completed projects and step-rent adjustments by REIT-owned properties as leases expired.
The market is increasingly bifurcated by asset quality, JLL said. Older facilities have responded to competition by offering longer rent-free periods and additional services to retain occupiers, while newer Grade A assets have been able to command premium pricing.
The pipeline is also becoming more technology-intensive. JLL highlighted IJM's Storio Logistics at Elmina, which is scheduled for completion at year-end and will incorporate automated storage and retrieval systems with 100,000 pallet positions and automated guided vehicles.
JLL said the growing adoption of automation reflects a broader shift towards high-specification facilities. At the same time, reductions in government petrol subsidies have introduced uncertainty over construction costs and development feasibility, making cost pressures a key issue for the market's future pipeline.