Kuala Lumpur is sitting on a paradox: while its skyline continues to grow, much of its office space remains underutilised. In Klang Valley alone, some 28.3 percent of office inventory lies vacant, a rate that places Malaysia among Asia-Pacific’s most over-supplied markets. At face value, this suggests demand has collapsed. But, a deeper look reveals a more nuanced shift; businesses no longer seek square footage by default, but environments that flex, support their evolving workflows, and speak to employee expectations.
The surplus in office stock is only half the story. Much of that space was built for a pre-pandemic world. Today’s hybrid and distributed models demand agility: tenancy terms that scale, multi-node footprints, plug-and-play fitouts. Tenants now judge buildings on layout, daylight, connectivity, wellness features, proximity to transit, and whether the space feels alive rather than just utilitarian. A survey of companies indicates that if the built environment doesn’t “feel right,” 95 percent of employees are unlikely to use it fully.
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This mismatch has stirred innovation in how landlords and operators structure space. Gone are purely transactional leases. In their place, co-investment and revenue-sharing models are emerging. Landlords now increasingly partner with flexible workspace operators: they pay for renovations, upgrade lobbies and amenities, embed in-building coworking floors, then share the upside from bookings, membership, and managed office revenue. These hybrid models align incentives—operators scale utilisation, landlords retain long-term control and benefit from new income streams.
The value of asset enhancement cannot be overstated. A refreshed lobby, healthier ventilation, shared wellness zones, or thoughtfully curated common areas can reposition a decades-old building to compete with newer developments. In Kuala Lumpur, flexible workspace demand surged 78 percent year-on-year in 2024, making it one of Asia’s most dynamic markets in the sector. Yet this growth is tempered by regional trends: in APAC, flexible office expansion has normalised—annualised growth fell from 51 percent pre-COVID to about 4 percent in the 2020–2024 period. The challenge now is turning this momentum into sustainable, scalable models across varied asset classes and cities.
To find out more, we speak to Stephanie Ping, CEO and co-founder of WORQ, Malaysia’s largest local co-working brand, to find out more about the evolving industry.
Vacancy rates in Klang Valley are among the highest in Asia-Pacific, with 28.3 per cent of office space sitting empty. From your perspective, what structural factors have contributed to this prolonged oversupply in Malaysia?
Over the years, more office space has steadily entered the market, but the way businesses want to use space has shifted dramatically. The challenge is not necessarily that demand has disappeared, but rather in how existing supply no longer matches how companies and employees prefer to work today.
Many companies are no longer willing to lock themselves into large, long-term leases. With hybrid and flexible work now the norm, they are looking for agility, the ability to scale space up or down quickly or access multiple locations across the city depending on their teams’ needs. This reflects strong demand for flexible office spaces compared to traditional office offerings.
At the same time, tenants are paying closer attention to the quality of the workplace experience. It is no longer enough to have an office in a central location; companies now evaluate factors such as layout, natural light, access to public transport, the availability of amenities, and whether the space supports both productivity and wellbeing. If the office environment does not deliver on these points, 95 per cent of employees are less likely to use it effectively.
Human resources priorities are also shaping office demand. Attracting and retaining talent is tied closely to the kind of work environment companies provide. Younger generations, particularly Gen Z, are seeking inclusive and supportive setups that accommodate employees with different needs, such as working parents or persons with disabilities, while also supporting their overall well-being.
This is why the oversupply issue is twofold: where there is too much space, and much of it is the wrong kind of space. A large portion of existing stock does not align with today’s expectations, which explains why vacancy rates remain high even as businesses continue to invest in more flexible, people-centred workplaces.
Regarding landlord partnerships, how does this model work in practice, and how does it align incentives between building owners and operators?
The partnership model is quite different from a traditional lease. Instead of the operator renting a large floor on fixed terms, the landlord and operator co-invest in upgrading and fitting out the space. This way, both parties are aligned in how the space performs. The operator brings in tenants, manages the space, and ensures strong utilisation, while the landlord shares in the recurring revenue.
For landlords, this is a forward-looking approach to participate in the revenue stream of a flexible workspace operator and enhance the long-term value of their building. By offering coworking and flexible workspace solutions inside the property, they open the doors to a new market of small teams and SMEs that might not otherwise lease space in a traditional office tower.
It also benefits existing tenants. Many companies today want the convenience of having flexible options alongside their core office. With a coworking operator in the same building, tenants can easily rent additional space for project teams, accommodate temporary staff, or book meeting and event rooms on demand. This helps them reduce their permanent office footprint while still enjoying the full facilities whenever they need them.
In fact, we are seeing that the availability of coworking and shared amenities has become one of the deciding factors when companies evaluate which building to choose as their headquarters. Beyond that, these spaces also act as a community hub, fostering connections and collaborations among the different businesses housed within the building.
The model works because it aligns incentives. Landlords gain both financial returns and stronger tenant demand, while operators bring their expertise in managing dynamic workspaces and building thriving business ecosystems.
Beyond revenue, what role does asset enhancement play in repositioning older or underperforming properties in Kuala Lumpur’s market?
Asset enhancement plays a crucial role in making older or underperforming properties competitive again, especially in a market like Kuala Lumpur, where tenants are becoming far more selective. Even straightforward upgrades, such as improving lobbies, refreshing common areas, or adding wellness-oriented features, can help reposition a building. This is because we are seeing a “flight to quality,” where companies are looking for both space and environments that support a new way of working.
Tenants today are making decisions based on the experience inside the building. Factors like the overall layout, ambience, ergonomic furniture, natural elements, access to public transit, and the availability of amenities all play into how attractive a property is. In other words, the workplace has to feel like it improves the employees’ overall well-being, not just provide a desk.
Ultimately, asset enhancement is not just about cosmetic improvements; it is about aligning the property with how people want to work today. By combining physical upgrades with flexible workspace offerings, landlords can unlock new demand and ensure their properties remain competitive in a shifting market.
What lessons can be drawn from these experiences with Pelaburan Hartanah Bhd and BU regarding the scalability of landlord–operator partnerships?
The key lesson from our partnerships with Pelaburan Hartanah Bhd (PHB) and Bandar Utama (BU) is that once occupancy and demand are proven, landlords become confident in scaling the model further. It shows that this approach is not a one-off solution but rather a repeatable, scalable strategy for repositioning properties.
For example, at Menara 1 Sentrum in KL Sentral, we began with two levels in partnership with PHB. Both levels achieved full occupancy shortly after launch, which gave PHB the confidence to expand the collaboration further. This led to the opening of an additional space on Level 28, which was immediately taken up by global companies such as Datacom Systems and WithSecure. The success here shows how a well-executed partnership can attract multinational tenants and strengthen the building’s position as a hub for enterprise clients.
We have seen a similar trajectory with UOA at Menara UOA Bangsar. WORQ’s space initially launched with one floor, but after achieving 70 per cent occupancy even before launch, we expanded to a second floor. Today, the outlet houses a wide mix of organisations, from venture capital firms to global tech companies, proving that demand for flexible, community-driven office space goes well beyond startups.
Most recently, we entered into a joint partnership with Bandar Utama City Group to open WORQ at 8 First Avenue, Bandar Utama, strategically located in a prime transit-oriented hub. These examples highlight that institutional landlords are increasingly recognising the value of flexible space in enhancing their buildings, and once the model demonstrates results, it can be replicated and scaled across their portfolios.
Landlords enhance the value of their buildings while capturing demand that they could not serve under conventional rental models. Our role here at WORQ is to bring in a diverse mix of tenants, from SMEs to multinational corporations, and create ecosystems that foster collaboration and innovation.
It also demonstrates that institutional landlords, in particular, see this as a sustainable way to achieve stable returns and grow the long-term value of their portfolios. By embedding flexible work solutions and shared amenities, they make their properties more attractive to both existing tenants and new markets.
Flexible workspace demand in Kuala Lumpur grew by 78 per cent in 2024, one of the fastest in Asia-Pacific. How is WORQ adapting its offerings to capture this demand, and what trends are you seeing among occupiers?
At WORQ, we are responding to this shift by tailoring our offerings to the needs of different occupiers, from startups and SMEs to multinational companies. These companies want enterprise-grade solutions that are easy to scale up or down without the heavy upfront costs of a traditional lease, but it goes beyond that. It’s also about providing the convenience of our transit-oriented locations, boosting productivity, and enhancing overall employee satisfaction and well-being.
Another trend we are seeing is the preference for a network of locations across the city, giving companies the ability to place teams closer to clients or employees while enjoying the same standard of workspace. Occupiers also place greater importance on wellness features and collaborative spaces that support new ways of working. Beyond functionality, companies are increasingly prioritising the people experience (PX), recognising that a well-designed environment can improve productivity, support employee wellbeing, and help attract and retain talent.
How do you see wellness, transit-oriented locations, and common area upgrades shaping the future of workspaces in Malaysia?
Wellness is becoming a central factor in how companies choose their workspaces, as it has a direct impact on talent attraction, retention and overall productivity. Increasingly, businesses want environments that support the well-being of their people, with features such as ergonomic design, wellness rooms and community-driven programmes. Location also plays a key role, and transit-oriented outlets are particularly attractive because they reduce commuting stress.
At WORQ, 50 per cent of our members already use public transport to reach our spaces, which shows the importance of accessibility in shaping workplace decisions. In addition to that, common areas and shared facilities are now seen as more than just amenities. They are critical spaces that foster collaboration and create a sense of community, particularly when supported by curated events such as NetWORQ, EQ Series and Founder-Investor Connect.
These elements are redefining the future of workspaces in Malaysia, shifting the focus from traditional offices to dynamic ecosystems that prioritise people, connectivity and collaboration.
Can this partnership-led model play a role in stabilising Malaysia’s office oversupply over the long term, or will deeper structural shifts still be required?
This partnership-led model in particular has clear potential to absorb underutilised office space and transform it into productive assets, while at the same time improving the range of offerings available to tenants. By reconfiguring space into flexible solutions, landlords can meet modern occupier needs, support business growth and contribute positively to the wider economy.
That said, while such partnerships are an important step, they don’t necessarily resolve oversupply on their own. Long-term stability in the office market will also depend on broader structural shifts, including sustained economic growth, better urban planning and the continued evolution of workplace preferences. Taken together, these factors will determine how effectively Malaysia can adapt its office landscape to changing demand.