• Riyadh’s prime office vacancy fell to a record low of 1.9% and Jeddah’s Grade A vacancy contracted to 5.1% as corporates upgrade into newer, amenity-rich developments
  • Upcoming large-scale developments, including Westfield’s anticipated arrival, mark a pivotal shift toward premium, experience-focused retail environments
  • 601 K sq m of retail space expected to come online before year-end in both Riyadh and Jeddah combined

Riyadh, Kingdom of Saudi Arabia; 25August2026 –Saudi Arabia’s commercial real estate sector is poised for substantial transformation, with a distinct flight to quality shaping the office market and a pivotal shift toward premium, experience-focused retail environments, according to new Q2 2026 market reports by JLL. Driven by the continued momentum of Vision 2030 and stable market fundamentals, both sectors are demonstrating increasing maturity and competitiveness. The Kingdom’s shift into a disciplined growth phase sees businesses prioritizing modern, amenity-rich office environments, and the retail sector preparing to welcome internationally recognized retail concepts and premium brand portfolios.

Saud Al Sulaimani, CEO and Head of Capital Markets – KSA at JLL, said: “Our Q2 data reveals the increasing stratification in Saudi Arabia’s commercial real estate market, with asset quality becoming the primary driver of performance across both office and retail sectors. We are seeing a natural rebalancing of rental appreciation as new inventory enters the market, and investment appetite shifts toward prime, modern office spaces and premier, experience-driven retail destinations. Landlords who prioritize asset quality, sustainability, and flexible terms are best positioned to drive value and meet these rising expectations as they successfully navigate the evolving landscape.”

Market rebalancing in the office sector

Flight to quality is the dominant occupier trend in the Saudi office market, as businesses increasingly upgrade to modern, amenity-rich developments. This has created a stark performance gap between prime assets and older stock. The trend is most pronounced in the capital, Riyadh, where tenant gravitation toward contemporary, well-positioned developments has driven the prime vacancy rate down to a low 1.9%, signaling a market with near-total occupancy for its best-in-class assets.

The demand for quality assets varies by city, with Jeddah’s Grade A vacancy contracting to a healthy 5.1%, while the Dammam Metropolitan Area remains more stable. As the market matures, inventory grows, and tenant options broaden, landlords are shifting their strategy and competing now on product offering and tenant experience rather than on rental pricing alone. This competition is set to intensify, particularly in Riyadh where an additional 929,300 sq m of office space is expected to enter the market, adding to the current 9.25 million sq m inventory.

Looking ahead, the Kingdom’s office market is poised for disciplined growth, and is increasingly stratified by asset quality and connectivity. Investor confidence remains robust, underpinned by powerful structural drivers such as Vision 2030, the Regional Headquarters Programme, infrastructure investment, and regulatory reforms. These are expected to sustain long-term capital flows and ensure the sector’s positive momentum.

Experience-led shift in retail

The Kingdom’s retail market remained resilient in Q2 2026, supported by robust domestic consumption and Vision 2030 driven initiatives, with vacancy levels and rental rates demonstrating limited fluctuation across Riyadh and Jeddah.

With stable fundamentals, this period of equilibrium positions the market for a substantial transformation with upcoming large-scale developments, including Westfield Jeddah in Q4 2026, marking a pivotal shift toward premium, experience-focused retail environments. This evolution signals a maturation of Saudi Arabia’s retail market, aligning local offerings with world-class shopping destinations.

The transformation is also shaped by the ongoing shift in consumer behavior, where omni-channel integration is now a baseline expectation, evident from a 45% surge in e-commerce activity during peak seasonal periods. A substantial development pipeline, including 471,000 sq m of new retail space in Riyadh, is set to significantly intensify market competition, making asset quality, curated tenant mixes, and experiential retail concepts more critical than ever.

Looking ahead, prime, destination-led schemes are anticipated to outperform secondary locations as retailers adopt more selective expansion strategies. The focus is on mixed-use developments, community centers, and integrated lifestyle hubs, reflecting the continued shift toward convenience-led and experience-driven formats.

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About JLL

JLL (NYSE: JLL) is a leading global commercial real estate services and investment management company with annual revenue of $26.1 billion, operations in over 80 countries and a global workforce of more than 113,000 as of December 31, 2025. For over 200 years, clients have trusted JLL, a Fortune 500® company, to help them confidently buy, build, occupy, manage and invest across a variety of industries and property types, including office, industrial, hotel, multi-family, retail and data centre properties. Driven by our purpose to shape the future of real estate for a better world, we help our clients, people and communities SEE A BRIGHTER WAY. Powered by rich global datasets and leading technology capabilities, we provide coordinated, end-to-end delivery of real estate services for a broad range of global clients who represent a wide variety of industries. Through LaSalle Investment Management, we invest for clients on a global basis in both private assets and publicly traded real estate securities. For further information, visit jll.com

About JLL MEA

Across the Middle East and Africa (MEA) JLL is a leading player in the real estate and hospitality services markets. The firm has worked in 35 countries across the region and employs over 1800 internationally qualified professionals across its offices in Dubai, Abu Dhabi, Riyadh, Jeddah, Al Khobar, Cairo, Casablanca, Cape Town, Johannesburg and Nairobi. For further information, visitjll.com