Office Leasing Outlook Analysis: KLCC & Klang Valley Selangor (2024-2025)

Executive Summary

The office leasing market in KLCC and Klang Valley Selangor is experiencing a bifurcated recovery with significant disparities between premium/new developments and older office stock.

The market is showing signs of stabilization with gradual improvement in select segments, particularly driven by flight-to-quality trends and ESG-compliant buildings.

KUALA LUMPUR CITY CENTRE (KLCC) Market Analysis

📊 Current Market Metrics (Q4 2024 – Q1 2025)

Rental Rates:

• Super Grade A: RM10.00 – RM15.00 psf

• Grade A (KLCC/Golden Triangle): RM5.00 – RM9.00 psf

• Average KL rental: RM4.98 psf (Q4 2024)

• Prime office rent: RM6.01 psf/month (Q1 2025 – stable QoQ)

Vacancy & Occupancy:

• Overall Greater KL occupancy: 75.2% (Q4 2024)

• KL City occupancy: 72.0% (slight decline from 72.1% in 2023)

• Vacancy rate: 24.6% (Q1 2025) – among highest in APAC but stabilizing

🏢 Premium Developments Leading the Market

Merdeka 118:

• Rental rates: RM10.50 – RM12.50 psf (gross)

• Pre-commitment level: ~70%

• Net lettable area: 1.7 million sq ft

• Main tenant: Permodalan Nasional Bhd (PNB)

Exchange 106 (TRX):

• Rental rates: RM10.00 – RM15.00 psf (gross)

• Current occupancy: 52% (expected to reach 70% by end-2025)

• Key tenants: Ant International, Huawei, Accenture, Agoda

Established KLCC Assets:

• Menara 3 Petronas: RM11 – RM12 psf (fully occupied)

• Menara Binjai: RM7.80 – RM8.80 psf (70% occupied)

📈 Market Dynamics & Trends

Positive Indicators:

• Highest net absorption since 2019: 1.7 million sq ft in 2024

• Flight-to-quality trend: Strong demand for ESG-certified, modern offices

• Technology and MNC expansion: Driving demand in premium segments

Challenges:

• Older buildings struggling: Non-upgraded assets facing high vacancy

• Market bifurcation: 15-20% higher occupancy in green-certified buildings

KLANG VALLEY SELANGOR Market Analysis

📊 Current Market Metrics (Q4 2024)

Rental Rates:

• Average Selangor rental: RM4.25 psf (2024, up from RM4.24 psf in 2023)

Occupancy by Submarket:

• Overall Selangor: 73.1% occupancy (Q4 2024)

• Petaling Jaya: 69.3%

• Shah Alam: 79.2%

• Klang: 61.0%

• Private purpose-built offices: 71.7% (up from 71.1% in 2023)

Supply:

• Total office supply: 50.42 million sq ft

• Net absorption 2024: 278,000 sq ft (modest compared to 400,000 sq ft in 2023)

🌆 Key Growth Areas

Emerging Suburban Hubs:

• Damansara Heights, Bangsar South, TTDI: Cost-effective alternatives with modern infrastructure

• i-City Shah Alam: Growing tech and SME hub

• Cyberjaya: Technology and government sector focus

📊 Market Trends

SME-Driven Demand:

• Gravitating toward transit-connected, cost-effective locations

• Preference for integrated developments with amenities

• Growing demand for flexible and co-working spaces

2025 MARKET OUTLOOK & PROJECTIONS

🎯 Supply Pipeline

New Completions Expected in 2025:

• TNB Gold Bangsar: GBI Gold-compliant, 44-storey development

• Sunway Square Corporate Towers: 537,904 sq ft NLA

• Total new supply: ~2.33 million sq ft

📈 Demand Drivers

Key Sectors:

• Technology: Leading expansion and regional setups

• Finance & Banking: Driven by TRX development

• Professional Services: Continued growth

• Oil & Gas: Significant space requirements

🔮 Market Predictions

KLCC Outlook (2025):

• Rental growth: Modest increases for prime assets (0.5-1.0% quarterly)

• Vacancy trends: Gradual improvement, targeting 20-22% by end-2025

• Premium segment: Continued outperformance vs older stock

• ESG compliance: Increasingly critical for tenant retention

Klang Valley Selangor Outlook (2025):

• Rental stability: Expected to maintain RM4.20-4.30 psf range

• Occupancy improvement: Targeting 75-77% overall

• Suburban growth: Continued shift from CBD to integrated townships

• SME demand: Driving flexible space requirements

💡 Strategic Recommendations

For Landlords:

1. Invest in ESG upgrades for older buildings

2. Focus on connectivity (MRT/LRT accessibility)

3. Enhance amenities and flexible workspace options

4. Consider repositioning underperforming assets

For Tenants:

1. Capitalize on tenant-favorable market conditions

2. Negotiate flexible lease terms in current environment

3. Consider newer developments for long-term value

4. Evaluate suburban alternatives for cost optimization

Key Risk Factors:

• High supply pipeline may pressure rents in secondary locations

• Economic uncertainties affecting expansion decisions

• Hybrid work trends potentially reducing space requirements

• Competition from regional markets for MNC relocations

Conclusion:

The KLCC and Klang Valley Selangor office markets are at an inflection point, with clear winners and losers emerging based on building quality, location, and ESG credentials.

While challenges remain with high vacancy rates, the market shows resilience through strong absorption in premium segments and steady improvement in occupancy metrics.

The outlook for 2025 suggests cautious optimism with gradual recovery, particularly for modern, well-connected, and sustainable office developments.

Disclaimer Clause for MegaHarta Real Estate Sdn Bhd

The information published on www.klcc-officespace.my is provided for general reference purposes only. MegaHarta Real Estate Sdn Bhd (including its employees, agents, and negotiators) shall not be held liable or responsible for any errors, inaccuracies, omissions, or discrepancies in the content presented on this website.

Prospective readers and users of this information are strongly advised to:

• Independently verify the accuracy of the data through other reliable sources.

• Conduct further due diligence before making any real estate decisions.

Market data sources referenced may include, but are not limited to: Zerin Properties, Knight Frank Malaysia, JLL Malaysia, CBRE | WTW, The Edge Malaysia, Real Estate Asia

By accessing this website, you acknowledge that MegaHarta Real Estate Sdn Bhd does not guarantee the completeness, reliability, or timeliness of the information provided and shall bear no liability for any losses or damages arising from its use.

For the most current and accurate market insights, consult licensed professionals or the respective data providers directly.

Last Updated: 23-07-2025