Dubai Office Rents Surge 31.5% as Supply Shortage Intensifies in Q2

The Dubai office market tightened further in the second quarter of 2026, with Grade B rents rising 31.5% year-on-year as companies competed for increasingly limited workspace. According to JLL, citywide office vacancy fell to 6.1%, down from 7.7% a year earlier, while rental registrations continued to increase.

The market’s strength was also reflected in major transactions. fäm Properties facilitated the sale of approximately 40,000 square feet of office space at Vision Tower in Business Bay for $33.8 million, described as a record Dubai office deal. Meanwhile, demand for high-quality space remained strong as businesses expanded their search across different office grades and flexible workspace options.

Dubai Office Rents Rise as Vacancy Falls

Dubai rental contract registrations increased 24.6% year-on-year and 15.1% quarter-on-quarter during Q2. At the same time, the Grade B vacancy rate dropped to 8%, down from 10.9% a year earlier. Grade C vacancy also declined to 10.9% from 12.7%.

Consequently, rental growth accelerated across the market. Grade A rents increased 26.2% annually, while prime office rents rose 13.6%. The widening shortage of premium space is encouraging occupiers to consider lower-grade buildings, while flexible office providers continue to expand.

Dubai’s total office stock reached 100.6 million square feet, with almost 940,000 square feet scheduled for completion before year-end. However, the limited availability of high-quality space continues to place upward pressure on rents.

Abu Dhabi Office Market Remains Tightly Supplied

Abu Dhabi also recorded strong commercial property fundamentals during the quarter. Rental registrations increased 5.4% year-on-year, while contract renewals climbed 7.1%.

Overall office vacancy stood at just 1.4%, while prime availability reached only 0.1%. Accordingly, prime office rents increased 11.7% annually, followed by Grade A growth of 5.1% and Grade B growth of 4.2%.

JLL said Abu Dhabi delivered 38,000 square metres of Grade A office space during Q2, with another 57,000 square metres under development. Furthermore, the emirate’s Rent Freeze regulation, introduced in June, is expected to limit rental increases over the short to medium term.

Flexible workspace is also expanding across both emirates. Businesses are increasingly seeking shorter commitments and lower barriers to entry as artificial intelligence and automation reshape workforce requirements.

Community Retail Gains Ground Across the UAE

The commercial property trend extended into retail, although leasing activity moderated. Dubai’s retail vacancy rate fell to 4.7%, compared with 8% a year earlier, while super-regional malls recorded annual rental growth of 8.5%.

However, retail contract volumes declined 0.2% year-on-year and 14.2% quarter-on-quarter. Softer tourist footfall contributed to a more cautious leasing environment.

In Abu Dhabi, retail rental registrations increased 4.4% year-on-year, although quarterly activity declined 2.5%. Community centres recorded the strongest rental growth, rising 9.3% annually.

Developers are therefore placing greater emphasis on neighbourhood-focused destinations, diversified tenant mixes and experiential offerings such as children’s entertainment and food halls. At the same time, marketing strategies are shifting toward domestic consumers and longer-term engagement.

Commenting on the findings, Mouhammad Takieddin, CEO of Middle East and Africa at JLL, said: “The sustained momentum despite regional volatility reveals the increasing maturity and agility in the UAE’s commercial real estate market. Quality upgrades and delivery pressures are shaping pipeline dynamics in a highly supply-constrained office market, while retail developers, who are actively future-proofing their portfolios with a domestic-first strategy, are well-positioned to capture the most significant long-term value.

“Moving forward, the ability to rapidly align asset management strategies with these shifting occupier and consumer demands in an evolving landscape will be crucial in driving sustained portfolio performance.”

Overall, Q2 data points to a UAE commercial property market defined by strong office demand, constrained premium supply and increasingly targeted retail strategies. Dubai’s rental growth, in particular, highlights the continued pricing power of well-located office assets as occupiers compete for limited high-quality space.