Dubai Office Rents Stabilize Amid Strong Demand for Grade A Space in 2026
Khaleej Times
Dubai's office market shows resilience with steady rents and rising demand for Grade A offices, driven by SMEs and new businesses despite longer leasing decisions.
Dubai Office Market Overview Q2 2026
Dubai's office sector remained robust in the second quarter of 2026, with Grade A office space demand continuing to outstrip supply. Although leasing decisions took longer due to regional geopolitical uncertainty, the overall market showed resilience, supported by strong interest from small businesses, startups, and newcomers to the emirate. Landlords enjoyed limited availability of premium spaces alongside low vacancy rates, according to Savills.
Leasing Activity and Market Segments
Data from the Dubai Land Department revealed 38,082 office leasing transactions completed in Q2 2026, reflecting a 4% increase from the previous quarter. This growth was largely fueled by a 16% rise in new lease agreements, reaching 27,121, while renewals fell to 10,961.
Smaller offices under 500 square feet remained dominant, comprising 66% of all leasing transactions. This sector grew by 17% quarter-on-quarter, underscoring continued demand from SMEs and new firms attracted by Dubai's competitive environment and attractive occupancy costs.
Even though larger occupiers exhibited a more cautious pace in expansion or relocation, Savills attributes this trend to longer internal approval processes amid regional uncertainties rather than a drop in demand. Many companies opted to renew existing leases or choose flexible workspace alternatives, postponing bigger commitments.
Demand for Premium Grade A Offices
Demand for premium office spaces stayed notably strong. Savills highlighted developments like DIFC Square, a major Grade A project that was substantially pre-leased before completion and continues to see high occupier interest. Another key project, Immersive Tower, scheduled for completion in July 2027, already has significant space under offer, reflecting healthy appetite for future Grade A offerings.
Rental Trends and Market Stability
Average office rents stabilized at AED 238 per square foot during Q2 2026—the first quarter without rental growth since early 2021. Savills stresses this stabilization reflects a market moving toward a sustainable phase after years of rapid rent increases, rather than a correction. Limited new Grade A supply helps sustain landlord pricing power.
Toby Hall, Head of Commercial Agency at Savills Middle East, remarked, "Following several years of exceptionally strong leasing activity and rental growth, Dubai's office market is transitioning into a more balanced phase. While occupiers are taking more time to evaluate their options, demand for high-quality office accommodation remains resilient, particularly within the Grade A segment."
Outlook for the Second Half of 2026
Leasing activity is expected to pick up as postponed occupier requirements re-enter the market later this year. Around 1.9 million square feet of office space is set for delivery in 2026, with more than 4.2 million square feet projected by 2030. However, much of this upcoming Grade A supply is expected to be pre-leased or absorbed by existing demand, minimizing immediate impacts.
Sectoral Demand and Economic Drivers
The strongest office space demand is anticipated in the financial services, technology, trading, and professional services sectors. Dubai's diversified economy, strong international business appeal, and limited Grade A supply underpin this trend.
Implications for Real Estate Agents
For agents, the stabilized rents and steady demand for small-to-medium office spaces offer an opportunity to focus on SMEs and startups who drive leasing growth. Understanding client hesitations amid geopolitical issues can help tailor flexible or phased leasing solutions. Keeping abreast of pre-leasing activity at premium Grade A developments will also position agents to capture high-value transactions as market confidence returns through 2026.
Based on reporting from Khaleej Times. Summary and analysis by Propilot AI.
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