Shifting trends boost office market
Despite the persisting office space glut, especially in the Klang Valley, experts believe the sector is on the path to recovery.
KUALA LUMPUR: Clearer tariff policies have injected fresh momentum into Malaysia's industrial market, with demand rising sharply as tenants and investors regain confidence, according to JLL Malaysia.
Jamie Tan, managing director of JLL Malaysia, said the market responded positively following the detailed tariff announcements in August 2025, which helped reduce uncertainty for businesses operating in the industrial sector.
Once the policy landscape became clearer, tenants were more willing to commit to leases and expansion plans, while investors regained confidence in the stability and predictability of the market, Tan said.
He added that renewed activity is evident across various industrial segments, including logistics, manufacturing, and warehousing, signaling a healthy rebound for the sector.
Overall, this development underscores the importance of policy transparency in sustaining market confidence and supporting long-term growth in Malaysia's industrial real estate, Tan noted.
According to JLL Malaysia's Q4 2025 Market Dynamics Report for Greater Kuala Lumpur's commercial real estate sectors, released on Tuesday, net absorption reached 234,878 square feet, while vacancy declined to 5.7 per cent from 6.3 per cent.
The report noted that strong occupier demand is anticipated to continue to be observed in the industrial and logistics sector, driven by significant expansion in the electrical & electronics (E&E) sector, particularly high-value manufacturing operations aligned with Malaysia's National Semiconductor Strategy (NSS).
The NSS positions Malaysia as a global semiconductor R&D and manufacturing hub, creating sustained long-term demand for advanced industrial warehousing, specialized manufacturing facilities, and integrated logistics infrastructure to support the complex semiconductor supply chain ecosystem.
Johor, in particular, is experiencing exceptional industrial activity through the Johor Special Economic Zone (JS-SEZ), which is attracting substantial manufacturing investments that demand sophisticated logistics and warehousing infrastructure.
Tan said this expanding manufacturing base is driving heightened demand for Grade A industrial facilities, automated distribution centers, and multimodal logistics hubs throughout the southern corridor.
Data center supply chain manufacturers are also strategically expanding their Malaysian footprint, capitalizing on the country's robust technology ecosystem and skilled workforce.
According to the report, Malaysia's data center sector is experiencing unprecedented growth, with capacity set to increase from about 1,025 megawatts (MW) at the end of 2025 to around 2,100 MW by the end of 2026. The pipeline reveals another 4,000 MW planned, underscoring the sector's explosive expansion trajectory.
Cyberjaya maintains the highest density of data centers in Malaysia, evolving from enterprise colocation to significant hyperscale deployments.
Greater Kuala Lumpur hosts 175 MW completed with 600 MW under construction, while Johor represents the largest hub with 850 MW completed and 1,500 MW under construction.
"The high concentration of hyperscale data centers in Johor is particularly supporting manufacturing segment expansion, creating a symbiotic ecosystem where proximity to end-users drives localized production and specialized logistics demand specific to data centers operational needs," Tan said.
He added that these converging trends signal a structural shift toward higher-specification industrial real estate demand in Malaysia, emphasizing modern facilities capable of supporting advanced manufacturing processes and technology-driven supply chains.
With no new completions in Q4 2025, total Grade A warehouse stock remained at about 36.78 million sq ft. Average capital values edged up slightly from RM372/sq ft to RM374/sq ft, while Grade A warehouse yields compressed by three basis points, reflecting sustained investor confidence.
