Abu Dhabi’s office market posted another quarter of strong rental growth in Q1 2026, with prime office rents rising 11.7% year-on-year as supply constraints and sustained occupier demand continued to tighten market conditions, according to JLL’s latest Real Estate Market Dynamics report. Prime office vacancy across the emirate fell to just 0.1%, while overall office vacancy stood at 1.4%. Total office stock expanded to 4.18 million sqm during the quarter.
Original article: Abu Dhabi prime office rents jump 11.7% as vacancy falls to 0.1%: JLL by Arabian Business.
Key Insights:
Prime Supply Constraints Support Rental Growth
JLL said Abu Dhabi’s Grade A office rents increased 5.1% year-on-year, while Grade B rents rose 4.2%, showing continued strength in higher-quality commercial assets despite more measured leasing activity during the quarter.
Taimur Khan, Head of Research, MEA at JLL, said: “With strong underlying economic fundamentals and agile occupier and landlord strategies, the UAE’s office and retail sectors demonstrated remarkable resilience and a strong capacity for strategic adaptation as they navigated measured activity in the first quarter. Despite short-term adjustments, demand remains robust, signaling the market’s inherent strength and positioning it for sustained growth as demand for prime spaces accelerates amid tightening supply.”
Leasing Activity Moderates Despite Strong Occupier Demand
While rental performance remained firm, some indicators pointed to more selective occupier activity during the quarter. JLL reported that office rental contract registrations declined 6.0 % year-on-year, while monthly new office contracts fell 19.7 % compared to previous periods.
Despite the moderation, the consultancy said long-term fundamentals remain supported by constrained prime supply and continued occupier demand for high-quality office space.
The report noted that developers are continuing to manage global supply chain pressures through phased procurement strategies, contractor negotiations, and strategic sourcing initiatives.
Retail Market Remains Stable
Abu Dhabi’s retail sector maintained stable vacancy levels in Q1, with citywide retail vacancy holding at 8.9%. Prime super-regional malls continued to command premium rents of AED 5,524 per sqm, supported by selective tenant demand and continued strength in dominant retail destinations.
Retail activity showed signs of resilience, with total retail registrations increasing 3.6 % year-on-year and new contracts rising 16.7% during the quarter.
JLL said leasing negotiations are increasingly centered around flexible structures, including occupancy-cost-ratio (OCR) and turnover-rent (TOR) agreements, as retailers adapt to evolving consumer spending patterns.
The consultancy added that retailers are continuing to explore experiential concepts, wellness-focused offerings, and pop-up retail formats to support domestic demand, while community and neighborhood retail centers are expected to remain resilient despite potential short-term pressure on tourism-driven retail segments.
