“CBRE says ageing office buildings in the Klang Valley may need refurbishment or repurposing as occupancy stays weak, with tenants favouring newer, energy-efficient offices ahead of 2026.”
Kuala Lumpur, 07th January 2026, 06.42pm – Older office buildings in the Klang Valley are increasingly under pressure to undergo refurbishment or be repurposed, as overall office market conditions remain subdued heading into 2026, according to CBRE.
Speaking at a briefing on Wednesday (Jan 7), the real estate consultancy said average office occupancy in the Klang Valley stood at 79.2% in 2025, reflecting weak demand across the sector. The data was cited from the Malaysia Real Estate Market Outlook 2026 report by CBRE | WTW.
CBRE noted that demand for older, non-prime office buildings continues to soften, as tenants increasingly prioritise newer, energy-efficient offices located in well-connected areas. While rental rates for prime office buildings have increased by about 4%, older assets remain under pressure.
“As a result, these underperforming non-prime offices are likely to be repurposed, following recent trends such as office-to-hotel conversions,” said Mary Kurien, director of research and consulting at CBRE.
Competition is expected to intensify further with more than five million square feet of new office space scheduled for completion in 2026, posing additional challenges for ageing office stock.
Recent examples of adaptive reuse include the conversion of Wisma KFC into the Hyatt Centric Kuala Lumpur hotel and Wisma Lirava into Else Kuala Lumpur, a boutique hotel. CBRE said similar office-to-hotel and office-to-residential conversions are likely to gain momentum, supported by tax incentives introduced under Budget 2026 to encourage the repurposing of commercial buildings.
Beyond offices, retail property performance in the Klang Valley remains mixed. Prime shopping malls such as Suria KLCC, Pavilion Kuala Lumpur and Mid Valley Megamall continue to record occupancy rates exceeding 90%, while older and smaller malls face weaker leasing conditions. Tenant demand has been led mainly by the food and beverage sector, followed by fashion and accessories.
CBRE noted that about 4.2 million square feet of new retail space has recently been completed or is expected to open this year, with retailers also anticipating the opening of Merdeka 118 Mall in the third quarter of 2026.
While higher living costs may weigh on consumer spending, Kurien said this could be partially offset by Visit Malaysia 2026 initiatives and relaxed visa policies, which are expected to support footfall, particularly at tourist-oriented prime malls.
Meanwhile, the hotel sector showed signs of improvement, supported by rising tourist arrivals and major events, including those linked to the Asean Summit 2025. Around 2,200 new hotel rooms were added over the past year, largely in the five-star segment, with another 2,000 rooms currently under construction.
Overall, CBRE’s outlook suggests the Klang Valley property market will remain stable, with demand increasingly centred on newer, well-located assets, while older buildings face mounting pressure to adapt through upgrades or repurposing.
