Measured relocation pace supports strategic outlook

• Given no new completions, demand continued to grow at a measured pace, registering 430,000 sq ft of net absorption. As the year concluded, many businesses focused on comprehensive planning for their relocation assessments.
• Shared services remained key drivers, expanding in KLF and DC areas, while technology companies drove KLC demand. Flight-to-quality trends persisted as long-term tenants prioritised premium buildings over deteriorating assets.

Building the future by repurposing the past

• The supply pipeline was scheduled to deliver between 2026 and 2030, with an even concentration in all submarkets. No completions were expected in 2028, which would indirectly increase prime rents due to the scarcity of prime green space.
• As tenants relocated to premium offices, older buildings became vacant. Government initiatives offering 10% tax deductions may have incentivised landlords to convert these commercial spaces into residential units, reducing office oversupply pressure.

Quality commands a premium amidst rising costs

• Rental increases became prevalent due to constrained supply of quality office space, SST expansion and inflation, particularly in prime locations, i.e. TRX and Bangsar South. Overall rental rates reached RM6.81 per sq ft in 2025, reflecting 0.33% y-o-y growth.
• Transactions remained limited, driven by local activities. Apart from own stay, this acquisition also focused on value-add opportunities, for renovation and tenant repositioning.

Outlook: Strategic leap forward for future-ready workplaces

• Tenants continue seizing opportunities to upgrade to future-proof workplaces. This strategic investment in premium, sustainable offices provide a clear pathway to attracting top talent, enhancing employee wellbeing and achieving long-term ESG goals.
• The economic landscape creates a clear incentive for businesses to invest in quality. Moving into premium, green buildings is a forward-thinking strategy to unlock long-term operational savings, build resilience and establish market leadership in efficiency.