The UAE’s two largest business centres are entering the second half of 2026 with an increasingly valuable commodity in short supply: quality office space. In both Dubai and Abu Dhabi, companies continue to compete for well-located workplaces, allowing landlords to maintain strong negotiating positions even as some businesses take a more cautious approach to expansion.
The imbalance became particularly visible during the second quarter. Companies occasionally postponed immediate leasing decisions because of broader economic and regional uncertainty, but large-scale downsizing remained limited. Available offices continued to attract replacement demand, particularly in established commercial districts where modern stock is difficult to secure.
According to Khaleej Times, citing JLL’s UAE Market Dynamics Q2 2026 report, Dubai recorded a 24.6% year-on-year increase in rental contract registrations. Registrations were also 15.1% higher compared with the previous quarter, with new agreements providing much of the momentum. Abu Dhabi showed a more moderate annual increase of 5.4%, while renewals rose 7.1%.
Office scarcity strengthens landlords’ position
Limited availability remains one of the defining characteristics of the UAE commercial property market.
Dubai’s citywide office vacancy rate declined to 6.1% in the second quarter, compared with 7.7% a year earlier. Premium workplaces are particularly difficult to find. Prime office availability remained at only 0.7%, while Grade A vacancy stood at 4.2%.
The shortage is also changing tenant behaviour. Businesses unable to secure prime premises are increasingly considering properties in lower office categories, reducing vacancies beyond the premium segment. Grade B vacancy in Dubai fell from 10.9% to 8% year-on-year, while the Grade C rate declined from 12.7% to 10.9%.
The situation is even tighter in Abu Dhabi. Overall vacancy was just 1.4%, while availability of prime office space reached an exceptionally low 0.1%. Grade A vacancy was also limited to 1.4%.
Such conditions leave landlords with little incentive to offer substantial discounts. When one prospective tenant delays a decision, another business may be ready to take the same space. This dynamic is helping owners preserve rental levels and negotiate from a position of strength.
Rental movements demonstrate how strongly the supply shortage is affecting Dubai. Grade B rents increased 31.5% from a year earlier and 8.7% quarter-on-quarter. Grade A offices recorded annual growth of 26.2%, while prime rents advanced 13.6%.
Abu Dhabi recorded less aggressive increases. Prime office rents were 11.7% higher year-on-year, although they slipped marginally by 0.3% from the previous quarter. Grade A and Grade B properties registered annual gains of 5.1% and 4.2%, respectively.
New supply may offer only limited relief
The development pipeline could gradually provide tenants with additional options, but near-term deliveries remain modest relative to demand.
Abu Dhabi added approximately 38,000 square metres of Grade A gross leasable area during Q2, taking total office inventory to about 4.2 million square metres. Another 57,000 square metres is expected during the second half of 2026.
Dubai recorded no major office completions during the quarter, leaving its total stock at approximately 101.4 million square feet. Around 940,000 square feet is expected to enter the market in the second half of the year.
Not all future supply will necessarily become freely available to tenants. JLL notes that a number of projects have already secured pre-lease commitments. At the same time, some existing Dubai buildings have temporarily left the market for refurbishment as owners attempt to bring older properties closer to the quality standards demanded by modern occupiers.
Construction and delivery schedules also remain exposed to supply-chain difficulties affecting imported materials. This creates another potential constraint on how quickly new projects can reduce pressure on the leasing market.
For property investors, these conditions strengthen the case for well-positioned commercial assets with high-quality specifications. Limited vacancy can support rental income and occupancy, although the rapid rise in rents also increases affordability pressure on tenants and may accelerate demand for alternative locations.
Flexible offices emerge as an alternative
The shortage of conventional office space is simultaneously creating opportunities for flexible workspace providers. Companies seeking to avoid long leases, substantial fit-out costs and large upfront capital commitments are increasingly considering serviced and adaptable office solutions.
Changes in workforce structures are reinforcing this trend. Greater adoption of artificial intelligence and automation is forcing businesses to reconsider staffing requirements and the amount of permanent space they need. Flexible offices allow occupiers to adjust their footprint more easily while retaining access to established commercial locations.
Abu Dhabi faces an additional regulatory factor. A new Rent Freeze policy introduced around the end of Q2 is expected to restrict further short-term rental increases in much of the capital’s office market, although newly completed developments and properties within Abu Dhabi Global Market are treated differently under the framework.
Even with these regulatory limits, JLL expects annual rental growth to continue through the end of 2026 across both emirates.
The broader investment picture therefore remains shaped by scarcity rather than excessive supply. Dubai continues to attract new occupiers while its immediate delivery pipeline remains limited, and Abu Dhabi is operating with exceptionally low vacancy. Unless substantially more office stock reaches the market, competition for quality premises is likely to keep landlords in a favourable position and commercial real estate firmly on investors’ radar.