Dubai’s commercial property market continues to show strong momentum. The ongoing Grade A office shortage has created significant ripple effects across the entire sector. As a result, demand is now rising sharply in lower-grade office spaces.
According to analysts at Cavendish Maxwell, this shortage has shifted focus. Many businesses are turning toward Grade B and C offices. These companies seek alternatives due to limited availability in prime office buildings. Consequently, prices in these lower segments are climbing rapidly.
Rental rates for Grade A spaces have already surged. This rise reflects sustained demand and very limited supply. Moreover, Grade A office shortage firms needing immediate office space have no choice but to explore other options. Thus, they begin renting in more affordable and accessible buildings.
In addition, the increase in foreign company registrations supports the trend. Dubai International Chamber reported a strong uptick in new businesses. This includes both multinational corporations and smaller enterprises. These new companies are driving further demand for all types of office space.
Developers now face growing pressure to address the Grade A office shortage. Many experts believe the city must fast-track construction of high-quality buildings. Otherwise, market imbalance will worsen, pushing more tenants into suboptimal locations.
Despite these challenges, the commercial property sector remains attractive. Investors are showing interest in upcoming developments. These projects aim to offer flexible workspaces that meet international standards. At the same time, developers are optimizing lower-grade buildings. They are upgrading features to attract displaced tenants from top-tier properties.
Furthermore, the increased interest in Grade B and C offices is reshaping the market. Property owners in these categories are improving their facilities. Their goal is to capture the new demand caused by the Grade A office shortage.
If this trend continues, price gaps between office grades may narrow. Tenants might face fewer options at all levels, especially during peak demand cycles. As competition rises, businesses must plan strategically to secure space.
To conclude, Dubai’s commercial real estate market is evolving quickly. The Grade A office shortage continues to influence pricing and demand in lower segments. All stakeholders must adapt to this shift to maintain growth and meet future needs.
