Dubai industrial leases rise 25.7% as UAE prime space nears full occupancy

Prime industrial districts in Dubai and Abu Dhabi are close to full, with little modern space left to let. New industrial leasing contracts in Dubai climbed 25.7 percent year on year in the third quarter of 2026, as newly arrived companies took space and existing occupiers expanded.

Demand concentrated in modern, well-located facilities. Supply of high-quality warehousing did not keep pace. JLL said Dubai had few vacant industrial units available during the quarter, leaving occupiers to compete for a thin pool of Grade A buildings while they waited for new deliveries.

Average Dubai industrial rents stood at AED50 a square foot, 5.9 percent higher than a year earlier. The persistent shortage of modern space shaped that rental performance. Competition centred on a small number of buildings rather than the market as a whole.

International and UAE-based logistics and e-commerce companies kept securing space and investing in new facilities through the quarter. JLL cited new Grade A logistics capacity in Jebel Ali Free Zone and major warehousing investments in Abu Dhabi as evidence that demand held.

Renewal activity told a different story. Renewals in Dubai fell 8.9 percent in the quarter, even as the number of renewed contracts came in 9.5 percent above the same period a year earlier. Some tenants moved or upgraded to better premises rather than signing again.

The scarcity has a quality dimension. Tenants chasing the limited modern space on offer are not shopping across the whole market, and older buildings do not easily absorb the demand that Grade A facilities cannot currently meet.

Occupiers have grown pickier about building specifications, location and connectivity. Below the leasing numbers, the way companies think about space is changing.

They are reworking logistics networks and supply-chain planning, carrying more safety stock and putting weight on dependable overland routes as a hedge against disruption. What they want is efficient access to ports, roads and other transport modes, not floor area on its own.

Business expansion across the Emirates keeps pushing firms into larger footprints, and the search is for premises that can absorb a supply-chain shock rather than the cheapest shed in the market.

Developers are responding. DP World and Arcapita's Lintara Properties broke ground in June on a 20,000 sq m Grade A logistics centre in Jebel Ali Free Zone, a build-to-suit facility with temperature-controlled areas, dangerous-goods storage and supporting office space. Completion is scheduled for the first quarter of 2027. New Grade A projects should ease Dubai's constraints once they arrive, though JLL cautioned that higher construction costs could delay some of them.

For occupiers, timing matters. Warehousing due in 2027 and 2028 will shift the balance in both cities, but only if construction schedules hold.

Abu Dhabi stayed tight, though rents moved less. Average industrial rents there reached AED489 a square metre, up 1.6 percent year on year and 0.6 percent on the previous quarter. Restrictions on rent increases across much of the existing stock explain part of the slower annual growth, JLL said. Demand and occupancy in prime locations held firm.

The emirate is adding specialised logistics infrastructure. In September 2026, KEZAD Group signed an agreement with JINGDONG Property, the infrastructure investment and asset management arm of JD.com, to develop about 150,000 sq m of warehousing at KEZAD Al Ma'mourah. The scheme, due in 2028, will use automated warehousing and digital operating technologies and is expected to create around 1,000 direct jobs.

JLL also identified a 37,000 sq m cold-chain hub at Abu Dhabi Food Hub and KEZAD Logistics Park 7, set to add 88,135 sq m of logistics space. The pipeline is tilting toward automation, cold chain and advanced distribution.

How goods move across the UAE and the wider Gulf increasingly shapes where companies locate. Multimodal links carry more weight in those decisions, particularly for operators moving freight between emirates and on to neighbouring markets. Rail and port connections have become part of the leasing calculation rather than an afterthought. JLL pointed to the AD Ports Group-Etihad Rail bonded corridor as infrastructure that could speed overland transport across the GCC over the longer term.

Manufacturing and re-export volumes give the sector its base. UAE industrial exports reached $50.9 billion in 2023, up 61 percent. Other consultants record the same pattern: CBRE's September review described constrained Grade A supply and continued occupier competition supporting rents in the main UAE logistics hubs. Investment is increasingly aimed at logistics infrastructure, manufacturing and institutional-quality industrial assets.