Prime office space in Abu Dhabi has almost disappeared from the market in the second quarter of 2026, according to JLL. Overall office vacancy in Abu Dhabi stood at 1.4% during the quarter, showing that quality office stock is in extremely short supply. The sharp decline shows sustained demand for premium workspaces across the UAE capital and has pushed office rents higher across all major categories.
Business activity continued to support the market, with rental contract registrations rising 5.4% from a year earlier. Lease renewals also increased 7.1% over the same period. The shortage of premium offices lifted prime rents by 11.7% year-on-year. Grade A office rents rose 5.1%, while Grade B rents increased 4.2%.
Abu Dhabi added 38,000 square metres of Grade A office space during the quarter. Another 57,000 square metres is scheduled for completion in the coming months.
Mouhammad Takieddin, CEO of Middle East and Africa at JLL, said, “Quality upgrades and delivery pressures are shaping pipeline dynamics in a highly supply-constrained office market, while retail developers actively future-proofing their portfolios with a domestic-first strategy are well-positioned to capture long-term value.”
Dubai also posted another strong quarter, with demand for high-quality office space continuing to outpace supply. Rental contract registrations increased, supported mainly by new leasing activity by 24.6% from a year earlier and 15.1% from the previous quarter.
The city's overall office vacancy rate declined to 6.1% from 7.7% a year ago. As prime offices became harder to secure, companies shifted towards Grade A and Grade B buildings. Grade B vacancy fell to 8% from 10.9%, while Grade C vacancy eased to 10.9% from 12.7%. Grade B office rents climbed 31.5% year-on-year, followed by Grade A rents at 26.2%. Prime office rents recorded annual growth of 13.6%.
JLL said flexible office operators are expanding across both cities as companies seek shorter lease terms, lower entry costs and greater operational flexibility. The consultancy also noted that wider adoption of artificial intelligence and automation is influencing workplace strategies.
In retail, Dubai's vacancy rate fell to 4.7% from 8% a year earlier, supported by strong demand for secondary regional and smaller-format malls. Super-regional malls recorded the strongest rental growth at 8.5%. Retail leasing activity, however, slowed during the quarter, with annual contract volumes slipping 0.2% and quarterly volumes falling 14.2%.
Abu Dhabi's retail market stayed stable. Rental contract registrations rose 4.4% year-on-year, while the vacancy rate held at 8.9%. Community centres emerged as the strongest-performing retail segment, posting annual rental growth of 9.3% as neighbourhood shopping destinations attracted stronger consumer interest. JLL added that developers are focusing on flexible leasing models, higher investment in tenant fit-outs and more experiential offerings to strengthen long-term retail performance.
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