PETALING JAYA: Kuala Lumpur’s prime-office market remained steady in the third quarter of this year (3Q25), supported by the city’s strong cost-to-quality proposition and growing demand for space aligned with environmental, social and governance (ESG) principles, transit-connected workplaces, according to Knight Frank’s latest Asia-Pacific Office Highlights report.
Prime office rents in Kuala Lumpur averaged RM6.02 per square foot per month, unchanged from the previous quarter but up 1.7% year-on-year. Vacancy levels eased slightly to 23.1% in 3Q25 from 23.4% in the 2Q25, reflecting sustained leasing momentum for Grade A properties.
“Kuala Lumpur’s cost-to-quality advantage continues to attract occupiers towards premium transit-linked and ESG-ready assets,” said Keith Ooi, group managing director of Knight Frank Malaysia.
“With competitive rents and ongoing infrastructure upgrades, the city is well-positioned as a long-term base in Asia-Pacific.”
Across the region, 16 out of 23 tracked cities recorded stable or rising prime office rents year-on-year, though Knight Frank noted that overall vacancy increased by 0.4 percentage points quarter-on-quarter due to new completions in India and China.
Tim Armstrong, Knight Frank’s global head of occupier strategy and solutions, said demand for office space is being reshaped by corporate transformation agendas.
“In this dynamic environment, organisations are prioritising space solutions that support higher density and maximise strategic value,” he said.
“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.”
Locally, the firm observed a continuing flight-to -quality trend, with occupiers seeking newer, sustainable buildings in integrated developments.
“Prime offices within integrated developments in Kuala Lumpur are experiencing good demand in the market with limited choices for large space requirements,” said Young Khean Teh, senior executive director of Office Strategy and Solutions at Knight Frank Malaysia.
Meanwhile, according to Christine Li, head of research for Asia-Pacific at Knight Frank, although markets in the region have remained cautious, demand for new space has stayed resilient as occupiers strive towards creating agile, data-informed ecosystems that flex with evolving needs.
She said 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,” added Li.
With no major new completions expected this year, Knight Frank projects Kuala Lumpur’s total office stock will rise by just 2.4% this year, keeping the market tenant-favoured but relatively stable heading into next year.
