Saudi office rents surge in Q2 2025 amid tight supply, rising demand: JLL

Riyadh, Saudi Arabia - September 3, 2025 - Saudi Arabia’s office market continued its strong momentum in Q2 2025, fueled by tight supply and robust demand in the Kingdom’s two largest commercial hubs, Riyadh and Jeddah. According to JLL’s latest KSA Office Market Dynamics report, exceptionally low vacancy rates and heightened occupier activity have created a landlord-favored environment, particularly for prime and Grade A office spaces.

Riyadh Leads With Record-Low Vacancies

Riyadh reported a near-zero vacancy rate of 0.5% for its prime office spaces in Q2 2025, underscoring the capital’s sustained demand for premium workspace. Grade A and Grade B office segments also maintained constrained vacancy rates, at 3.8% and 2.9% respectively.

This supply crunch has pushed rents sharply higher. Prime rents in Riyadh surged 7.3% year-on-year, reaching USD 968 (SAR 3,630) per sqm per annum, with the King Abdullah Financial District (KAFD) surpassing USD 1,068 (SAR 4,000) per sqm, reflecting the high demand for quality space.

The capital’s total office stock reached 8.1 million sqm during the quarter, with 660,000 sqm of new space expected to be delivered by year-end. In response to this demand, some residential properties are being converted into office space, while new occupiers are relocating to northern districts to avoid congestion.

Notably, Riyadh’s occupier base is becoming more diverse, with leasing activity expanding beyond traditional sectors to include healthcare, pharmaceuticals, and technology, signaling a broadening commercial landscape.

Jeddah Market Shows Healthy Growth

Jeddah mirrored Riyadh’s performance with similarly tight vacancy rates, standing at 3.3% for Grade A and 2.2% for Grade B offices. Strong demand pushed Grade A rents up by 4.3% year-on-year to USD 371 (SAR 1,393) per sqm, while Grade B rents increased by 6.5% to USD 248 (SAR 933) per sqm.

The city added 81,887 sqm of new office space in H1 2025, increasing total stock to 2.97 million sqm. A further 42,680 sqm of gross leasable area (GLA) is expected to be completed in the second half of the year to meet rising demand.

Dammam Metropolitan Area Presents a Different Landscape

In contrast, the Dammam Metropolitan Area (DMA) exhibited a different market dynamic. While vacancy rates remained much higher, 17.2% for Grade A and 21.4% for Grade B offices, the market continues to favor landlords due to a mix of government offices and owner-occupied buildings.

Grade A rents in DMA still experienced strong growth, rising 8.2% year-on-year to USD 265 (SAR 994) per sqm per annum in Q2 2025.

Vision 2030 Driving Expansion

Saud Al Sulaimani, Country Lead and Head of Capital Markets at JLL Saudi Arabia, emphasized the connection between market growth and the Kingdom’s broader economic strategy:

“The continued expansion of the KSA office market directly reflects the Kingdom's strategic vision for economic diversification and urban development. Riyadh's sustained performance, driven by a flight to quality and the Regional Headquarters Program, solidifies its position as a key business hub. With a diversifying occupier base and expanding flexible workspace options, we are witnessing a dynamic and maturing market where landlords are strategically adapting to meet evolving tenant needs for enhanced amenities and services.”

With Saudi Arabia’s Vision 2030 fueling economic diversification and new business activity, the Kingdom’s office sector is poised for continued growth, supported by premium developments, rising demand, and a shifting occupier landscape across its major cities.