Dubai’s office market is moving deeper into a period of limited availability, with companies competing for quality business space while landlords retain considerable control over lease negotiations. Strong corporate demand and a shortage of suitable offices are keeping rents elevated even as some occupiers become more cautious about expansion.
The imbalance was particularly visible during the second quarter of 2026. Some businesses delayed immediate leasing decisions amid economic and regional uncertainty, but there was little evidence of widespread downsizing. Offices returning to the market were often absorbed by other tenants, preventing a meaningful increase in available stock.
According to JLL’s UAE Office Market Dynamics Q2 2026 report, rental contract registrations in Dubai increased 24.6% year-on-year and 15.1% compared with the previous quarter. New agreements accounted for much of the improvement, indicating that companies continue to establish and expand operations in the emirate despite a more cautious global business environment.
Limited vacancies reshape tenant choices
The shortage of available offices is becoming one of the main forces determining leasing conditions in Dubai. The citywide vacancy rate declined to 6.1% in Q2, compared with 7.7% a year earlier. Availability is considerably tighter in the most desirable segment of the market, with prime office space remaining particularly difficult to secure.
This pressure is increasingly influencing where businesses are prepared to locate. Companies unable to find suitable premium premises are considering Grade B and, in some cases, Grade C properties. As demand spreads beyond the top end of the market, vacancies are also falling in these categories.
Grade B vacancy dropped to 8% from 10.9% a year earlier, while Grade C vacancy decreased from 12.7% to 10.9%. Prime availability remained at only 0.7%, illustrating the limited number of options facing companies that want high-specification premises in established commercial districts.
For landlords, the shortage means there is less pressure to provide substantial concessions. A company that postpones a leasing decision may find that another occupier is prepared to take the same property. This dynamic has allowed owners to defend asking prices and offer incentives selectively rather than broadly reducing rents.
Office rents continue to climb
The strongest rental growth has not been confined to Dubai’s most prestigious buildings. Grade B offices recorded the sharpest annual increase during the second quarter, with rents rising 31.5% compared with the same period of 2025. Quarter-on-quarter growth reached 8.7%.
Grade A properties were close behind, registering annual rental growth of 26.2% and a quarterly increase of 8.8%. Prime office rents advanced by 13.6% year-on-year.
The figures suggest that demand is increasingly filtering into a wider range of commercial properties. As premium space becomes harder to obtain, businesses are competing for well-maintained offices in lower categories, particularly when buildings offer convenient transport connections, modern facilities and locations close to established commercial clusters.
The situation also creates a more complicated environment for tenants. Rising rents increase operating costs, while limited availability can reduce the ability of companies to negotiate favourable lease conditions. Businesses planning to expand their workforce may therefore need to make property decisions earlier or consider locations outside the most established office districts.
Flexible workspace operators could benefit from this environment. Serviced offices and shorter lease arrangements give companies an alternative to committing significant capital to conventional premises. The growing use of artificial intelligence and automation is also changing workforce structures, encouraging some organisations to seek office arrangements that can be adjusted more easily as staffing requirements evolve.
New supply may not immediately ease pressure
Dubai recorded no major office completions during the second quarter, leaving total office inventory at roughly 101.4 million square feet, according to figures cited from JLL. Nearly 940,000 square feet of additional space is expected to reach the market during the second half of 2026.
However, new construction does not necessarily mean that all incoming space will be available to businesses searching for offices. A number of projects have already attracted pre-lease commitments, reducing the amount of future inventory that will enter the open market.
Some existing properties are also temporarily being removed from supply while owners undertake refurbishment programmes. Upgrading older buildings can improve the overall quality of Dubai’s office stock, but in the short term these projects can further restrict the amount of immediately available space.
Developers additionally face supply-chain pressures affecting imported construction materials and project schedules. With demand remaining strong, timely delivery is becoming increasingly important for owners seeking to take advantage of current market conditions.
For investors, the combination of limited vacancy and rising rents continues to support the appeal of well-positioned commercial assets. Yet the rapid increase in leasing costs also introduces a potential constraint: companies may eventually become more sensitive to occupancy expenses and explore emerging districts, flexible offices or alternative workplace strategies.
The second half of 2026 will therefore be shaped by the balance between new deliveries and continued corporate demand. If incoming supply remains limited or arrives with substantial space already committed, competition for established offices is unlikely to disappear quickly. Dubai’s commercial property market could remain landlord-friendly even as businesses become more selective about location, quality and cost.