The real estate landscape in Saudi Arabia is undergoing a significant transformation as office rents in Riyadh and Jeddah surge while vacancies plummet to historic lows. This trend reflects a robust demand for quality office spaces in these major cities, highlighting broader economic developments and evolving tenant preferences. As landlords gain more leverage in negotiations, both cities are experiencing a tightening market that is reshaping the office rental landscape in the Kingdom.
The current market conditions in Riyadh and Jeddah illustrate a landlord-friendly atmosphere, with prime and Grade A office vacancies reaching unprecedented lows. In Riyadh, the vacancy rate for prime office spaces stood at just 0.5 percent in the second quarter of 2025. Similarly, Grade A and B vacancies were recorded at 3.8 percent and 2.9 percent, respectively. Jeddah exhibited a parallel trend, with Grade A and B vacancies at 3.3 percent and 2.2 percent.
Impact of Demand on Rental Prices
This dramatic decrease in vacancy rates has directly fueled a rise in office rents across both cities. In Riyadh, prime office rents surged by 7.3 percent year-on-year, reaching SR3,630 ($968) per square meter annually, while the King Abdullah Financial District (KAFD) surpassed SR4,000 ($1,067) per square meter. Jeddah also experienced significant rental growth, with Grade A rents increasing by 4.3 percent to SR1,393 ($372) and Grade B rents rising by 6.5 percent to SR933 ($249) per square meter.
The Dammam Metropolitan Area (DMA) presented a contrasting picture with higher vacancy rates—17.2 percent for Grade A and 21.4 percent for Grade B. Despite these numbers, the DMA still registered an increase in rental prices, reflecting ongoing demand characteristics even in a market marked by oversupply. Grade A rents rose by 8.2 percent to SR994 ($265) per square meter per annum.
Market Insights and Predictions
Saud Al Sulaimani, Country Lead and Head of Capital Markets at JLL Saudi Arabia, emphasized the importance of these developments, stating, “The continued expansion of the KSA office market directly reflects the Kingdom’s strategic vision for economic diversification and urban development.” He further explained that Riyadh’s consistent performance can be attributed to a flight to quality and initiatives like the Regional Headquarters Program, which have reinforced its position as a key business hub.
Al Sulaimani also pointed out that the market is evolving, with a more diverse base of occupiers seeking flexible workspaces and premium amenities. As of Q2 2025, Riyadh’s total office stock reached 8.1 million square meters, with 0.66 million square meters expected to be completed by the end of the year. This high demand is fostering conversions of residential spaces to offices and spurring leasing activity in the city’s northern districts.
Notably, sectors such as healthcare, pharmaceuticals, and technology have begun to gain traction in the leasing market, further contributing to the surge in demand.
In Jeddah, the landscape is similarly promising, with the addition of 81,887 square meters of new office space in the first half of 2025, bringing the total stock to 2.97 million square meters. Another 42,680 square meters of gross leasable area is slated for delivery in the second half of the year, indicating a responsive market eager to meet tenant needs.