Nationwide office occupancy rates fell to 77.8% at end-June 2025 before slightly improving to 78% by September, the report said.
The real estate consulting firm reiterated the need for repurposing or asset enhancement strategies to reduce vacancy. Kuala Lumpur continues to hold the largest concentration of purpose-built office space in the country, with total supply reaching 109.86 million sq ft in 1H2025.
Occupancy stood at 72.2%, leaving around 30.51 million sq ft of vacant space, largely in older buildings.
The rise of new office hubs, including the Tun Razak Exchange, Merdeka 118, IOI City Towers and Pavilion Damansara Heights, has left ageing and underperforming buildings struggling to compete.
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Many offices built in the early 2000s no longer meet current standards for design, environmental performance, or technological readiness, contributing to a surplus of obsolete space.
Demand for office space in Kuala Lumpur is concentrated in premium, ESG-certified (environmental, social and governance), transit-accessible locations, supported in part by international interest driven by agencies such as InvestKL and Mida, Rahim & Co said.
In neighbouring Selangor, the country’s economic powerhouse, the office sector had a total supply of 50.58 million sq ft as of 1H2025 with an average occupancy rate of 72.5%, leaving about 13.9 million sq ft of vacant space.
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Petaling Jaya accounted for the largest concentration, with 20.2 million sq ft across 90 office buildings, representing 40% of the state’s stock. One new office building is currently under construction, which will add more than 350,000 sq ft of space once it is completed.
This story first appeared on Jan 8 in The Edge Malaysia
