Riyadh’s office market turns selective as rents peak and supply recedes

Tenants looking for prime Riyadh office space won’t get relief this year. Grade A occupancy held at 98% in 3Q and rents have flattened near their ceiling, with three of the four zones Savills tracks recording no change or a marginal dip, according to the firm’s latest Riyadh office report (pdf). The market is moving out of the rapid-expansion phase of the past few years into something more selective.

Rents are broadly flat, with growth at the fringe. Savills splits the city into four office zones. Prime Zone A — the central core anchored on KAFD — still commands the highest average rent at SAR 2.86k per sqm a year, though it eased 0.7% q-o-q and 0.3% y-o-y. Zone B, the eastern business parks around Riyadh Business Gate and Granada, and Zone C, the Olaya and King Fahd Road spine of Kingdom Centre and Al Faisaliyah, held flat on the quarter at around SAR 2.48k and SAR 2.47k, up 1.2% and 5.8% over the year. The standout is Zone D on the western side — the Diplomatic Quarter and Laysen Valley — up 1.6% on the quarter and 9.8% on the year to SAR 2.47k, as demand spills out of the saturated core in search of availability and access.

Demand is what’s keeping it tight, drawn by the regional-HQ push. Deutsche Bank and BNP Paribas took RHQ licenses over the summer, Greenberg Traurig moved into Kingdom Centre, Nokia opened an R&D center in September, Singapore’s Temasek plans a Riyadh office in 2027, and Barclays opened its KAFD headquarters this week.

The macro backdrop is reinforcing it: Business confidence rose to 56.6 in 3Q and the non-oil PMI averaged 54.1, while Saudi Arabia issued 9k investment licenses in 2Q, up 252% y-o-y, with the sectors that fill offices — information and communications (up 177%) and professional services (up 85%) — still expanding fast.

The supply that would loosen it is receding. More than 2.5 mn sqm of new Grade A space is due between now and 2030, lifting cumulative supply to 6 mn from 3.4 mn sqm this year, but 2026 completions are expected to roll into later years, so the near-term relief recedes. Over the longer term, Savills expects the pipeline to ease the tightness and hand tenants more choice and leverage on terms.

Occupiers are already playing defense. Amid geopolitical uncertainty they are favoring short-term renewals and immediately available fitted or shell-and-core space, while pre-leasing projects that still carry construction risk remains hard. Flex space is also gaining ground, with international firms targeting Riyadh through management and profitshare agreements, and five-year rent controls locking in cost certainty for tenants.

The outlook tilts toward flexibility. Savills expects occupiers to stay focused on cost control, flexible lease terms, and ready-to-occupy space, with further entry by flex operators widening choice and competition and new Grade A developments from 2027 gradually easing supply. Headline rents should stay broadly stable, with flexible terms and incentives supporting activity.

REMEMBER- International firms make up 50-60% of flexible-workspace occupiers in the capital, the highest share anywhere in the Middle East and Africa, and new business setups generate 55-60% of inquiries.