Knight Frank: Kuala Lumpur Office Market Holds Steady in Q3 2025 as Cost Competitiveness and ESG Credentials Sustain Occupier Interest

Knight Frank: Kuala Lumpur Office Market Holds Steady in Q3 2025 as Cost Competitiveness and ESG Credentials Sustain Occupier Interest

Prime rents remain stable; KL continues to offer one of Asia-Pacific’s best cost-to-quality propositions

• Asia-Pacific Outlook: 16 of 23 tracked cities across Asia-Pacific recorded stable or rising prime office rents year-on-year in Q3 2025, reflecting a steady regional occupier landscape despite a more cautious sentiment.
• Regional Vacancy Trend: Prime office vacancy in Asia-Pacific rose by 0.4 percentage points quarter-on-quarter, driven by strong new supply completions in India and Mainland China.
• Kuala Lumpur Snapshot: Prime office rents in Kuala Lumpur averaged MYR 6.02 per sq ft per month, up 1.7% year-on-year and flat quarter-on-quarter, underscoring selective, quality- focused leasing concentrated in ESG-aligned Grade A assets. Vacancy eased slightly to 23.1% in Q3 from 23.4% in Q2, reflecting ongoing flight-to-quality momentum.
• Local Market Outlook: Demand continues to favour premium, transit-linked offices with robust sustainability credentials, while SST cost considerations have encouraged more measured decision making among certain occupiers.
• Pipeline Supply: Kuala Lumpur’s office pipeline is projected to expand total stock by 2.4% in 2025, reinforcing a tenant-favoured environment as landlords compete for high-quality occupiers.

Knight Frank: Kuala Lumpur Office Market Holds Steady in Q3 2025 as Cost Competitiveness and

ESG Credentials Sustain Occupier Interest

Prime rents remain stable; KL continues to offer one of Asia-Pacific’s best cost-to-quality propositions

KUALA LUMPUR, 30 OCTOBER – Kuala Lumpur’s prime office market remained stable in Q3 2025, with rents holding at MYR 6.02 per sq ft per month and vacancy easing slightly to 23.1% from 23.4% in Q2, according to Knight Frank’s latest Asia-Pacific Office Highlights report. Despite slower regional momentum this quarter, Malaysia continues to appeal to occupiers seeking value-led upgrades — particularly into ESG-ready, transit-connected developments.

“Occupier priorities have continued to evolve amid ongoing geopolitical and technological shifts. In this dynamic environment, organisations are prioritising space solutions that support higher density and maximise strategic value. The sustained demand for premium spaces is closely tied to broader business transformation agendas. In a climate defined by uncertainty, flexibility and resilience have become non-negotiable. Corporates are committing to new spaces, but with a clear emphasis on agility, embedding flexible lease terms and pre-let options to maintain responsiveness and mitigate risk,” said Tim Armstrong, Global Head, Occupier Strategy and Solutions, Knight Frank.

“Kuala Lumpur’s cost-to-quality advantage continues to attract occupiers towards premium transit- linked and ESG-ready assets. With competitive rents and ongoing infrastructure upgrades, the city is well-positioned as a long-term base in Asia-Pacific,” said Keith Ooi, Group Managing Director of Knight Frank Malaysia.

“Although occupier markets in the region remained cautious, demand for new spaces has remained resilient as occupiers strive towards creating agile, data-informed ecosystems that flex with evolving needs. Technology is accelerating these evolving expectations, while the clustering of strategic functions in select districts continues to reinforce the divide between best-in-class assets and the rest.

While this dynamic will continue to anchor resilient demand for high-quality office environments, occupiers must remain vigilant in anticipating market shifts and exploring pre-leasing opportunities in under-construction projects to secure future-ready spaces,” said Christine Li, Head of Research, Asia-Pacific at Knight Frank.

Locally, landlords are sharpening their focus on retention and lifecycle asset performance, as occupiers persistently gravitate towards newer Grade A buildings with sustainability features and transit adjacency.

“Prime office within integrated development in Kuala Lumpur are experiencing good demand in the market with limited choices for large space requirement,” said Young Khean Teh, Senior Executive Director of Office Strategy and Solutions at Knight Frank Malaysia. “With no major new supply completing this year, vacancy in the top-tier segment is stabilising, reinforcing the flight-to-quality trend expected to continue into 2026.”

Download the report here: https://kf-my.com/KFAPAC-3Q2025-Office-highlights

— end of media release —

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