UAE industrial property sustains leasing momentum

Strong occupier demand and limited availability of high-quality warehouses continued to support the UAE’s industrial property market during the second quarter of 2026, even as the pace of rental increases eased from earlier highs.

Dubai industrial rents rose 6.8% year on year and 2.3% from the previous quarter. Abu Dhabi recorded annual growth of 5%, reflecting continued demand from logistics providers, manufacturers, technology companies and businesses seeking to strengthen regional supply chains.

The figures indicate that the market is moving from rapid rent escalation towards more sustainable growth. Leasing activity remained firm in both emirates, supported by economic expansion, infrastructure investment and the UAE’s position as a distribution centre connecting Asia, Africa, Europe and the wider Middle East.

Grade A industrial space remained particularly scarce. High occupancy levels allowed landlords to defend asking rents, although some introduced greater flexibility on lease periods and offered selective concessions of up to 15% in certain locations to maintain transaction volumes amid changing regional conditions.

The contrast between firm headline rents and targeted incentives points to a more measured market. Tenants are continuing to compete for modern facilities with strong transport connections, sufficient power supply, higher ceiling clearances and systems suited to automation. However, occupiers are also examining total operating costs more carefully after several quarters of steep increases.

Demand remains concentrated in Dubai South, Jebel Ali, National Industries Park, Al Quoz, Dubai Industrial City and areas linked to Al Maktoum International Airport. Companies requiring larger distribution centres are increasingly considering build-to-suit arrangements because ready-built facilities meeting international specifications remain difficult to secure.

More than seven million square feet of industrial stock is under development across areas including Al Warsan, National Industries Park and Dubai South. Much of the planned supply is being undertaken by institutional developers, while demand is strongest for facilities ranging from 10,000 to 50,000 square feet.

Abu Dhabi’s industrial market is benefiting from investment around Khalifa Economic Zones Abu Dhabi, Abu Dhabi Airports Free Zone and Musaffah. KEZAD has reached occupancy of about 98%, while warehouse leasing activity has increased by 35%, supported by direct connections to Khalifa Port and the expanding Etihad Rail network.

These transport links are becoming increasingly important to occupiers seeking alternatives to road-based distribution. Rail access, port proximity and airport connectivity can reduce delivery times, improve cargo handling and give manufacturers greater flexibility when sourcing raw materials or exporting finished products.

Grade A occupancy across the UAE industrial and logistics market averages about 95%. Broader market data show rents rising 18% in Dubai and 13% in Abu Dhabi over the preceding year, although differences in methodology, property quality and geographical coverage produce varying growth rates across industry reports.

The pressure on available space has prompted some businesses to look beyond established hubs. Sharjah, Ras Al Khaimah and other northern emirates offer lower occupation costs, although tenants must weigh those savings against transport distances, workforce access and proximity to customers.

Industrial landlords are also facing pressure to upgrade older warehouses. Energy efficiency, climate control, fire safety, rooftop solar capacity and digital inventory systems are becoming more important as multinational tenants apply stricter operational and environmental standards.

Government-backed industrial policy is reinforcing demand. The AED1 billion National Industrial Resilience Fund is intended to support the localisation of more than 5,000 critical products, strengthening domestic manufacturing capacity and reducing exposure to external supply disruptions.

DP World’s planned east-coast terminal is expected to add another layer of logistics resilience by expanding cargo-handling capacity outside the country’s established Gulf-facing network. The investment forms part of a wider push to diversify transport routes and protect trade flows from regional bottlenecks.

E-commerce operators, third-party logistics providers, food distributors, pharmaceutical companies and light manufacturers remain among the most active occupiers. Their requirements are gradually shifting from basic storage towards specialised facilities capable of supporting cold chains, robotics, data-led stock management and faster order fulfilment.