The UAE’s commercial real estate landscape has undergone a remarkable transformation in Q2 2025, marked by a significant increase in office rents. According to data from JLL, office rents have surged by 31% across the emirates as vacancies plummet to historic lows, signaling strong demand within the sector. This change is not limited to office spaces; retail demand is also rising, reflecting evolving consumer preferences and opportunities in the market.
Dynamic Shifts in the Commercial Market
JLL’s Head of Offices, Business Space, and Retail for the MEA region, Dana Williamson, commented on the shifting dynamics of the UAE’s commercial real estate sector. “The UAE’s commercial market is undergoing dynamic shifts, fueled by changing consumer and end-user expectations, which are driving growth and unlocking new avenues for investment,” she stated. This growth, however, is accompanied by imbalances in supply and demand within the office sector, exerting pressure on rental values.
Despite these challenges, the demand for high-quality, strategically located office spaces continues to thrive, as businesses seek to establish themselves in the best possible environments. Williamson highlights the ongoing trend of “flight to quality,” where tenants prioritize prime office locations above all else.
Office and Retail Trends Across the Emirates
Both Abu Dhabi and Dubai are expected to experience landlord-favorable conditions in the near future. In Abu Dhabi, prime office rents skyrocketed to AED 2,905 ($791) per square meter in Q2 2025, reflecting a significant 31.5% increase from the previous year. Similarly, rental rates in Dubai have shown strong upward momentum across different segments: prime rents rose by 17.3%, while Grade A and B rents experienced increases of 19.5% and 16%, respectively. Notably, Grade C rents surged by an impressive 22.9%.
Vacancy rates are exceptionally low, with Abu Dhabi reporting a mere 1.5% citywide vacancy and only 0.1% for prime offices. Dubai follows closely, showcasing a prime vacancy rate of 0.3% and an overall city vacancy of 7.7%. This indicates a highly competitive market where tenant activity is largely focused on securing lease renewals, which have grown by 0.8% in Abu Dhabi and 8.3% in Dubai.
Retail Growth and Consumer Trends
In contrast to the challenges faced in office leases, Abu Dhabi’s retail market saw a 12.1% decline in new rental contracts during Q2 2025. However, Dubai’s retail sector accelerated, with a year-on-year rise of 9%, largely fueled by an 11.9% increase in renewals and a 2.3% growth in new contracts. Overall, vacancy rates in retail also dropped, with approximately 9% in Abu Dhabi and 7.5% in Dubai.
In terms of retail rents, prime super regional rents in Abu Dhabi increased by 3.4% to AED 5,524 ($1,505) per square meter, while Dubai experienced a more significant rise of 15.1% to AED 826 ($225) per square foot. The total existing retail inventory in the two emirates stands at an impressive 8.13 million square meters, with an additional 98,000 square meters of new stock set to be introduced by year-end.
Innovations and Future Directions
JLL highlights that retailers are embracing data analytics and technological innovations to enhance the shopping experience. Physical retail spaces are progressively being transformed into experiential destinations, with food and beverage operators expanding their offerings. Moreover, developers are redefining traditional food courts into family entertainment zones featuring casual dining options.
Another notable trend is the expansion of e-commerce businesses into brick-and-mortar showrooms, which serve as micro-fulfillment centers to facilitate quick local deliveries and in-store pickups. This synergy between physical and digital retailing is indicative of the dynamic shifts currently reshaping the UAE’s commercial real estate market, as demand for quality spaces continues to dictate trends in both office rents and retail experiences.