The UAE’s industrial property market is nearing full occupancy, with new leasing contracts in Dubai rising by 25.7% year-on-year in the third quarter of 2026, according to JLL’s latest report. This surge in demand is driven by logistics and e-commerce companies expanding their operations in prime locations, highlighting the resilience of the sector amid limited Grade A supply.
As of Q3 2026, average industrial rents in Dubai have climbed to AED 50 per square foot, reflecting a 5.9% increase from the previous year. The report indicates that the emirate is experiencing a scarcity of available industrial space, compelling occupiers to compete for high-quality facilities while awaiting new Grade A developments. Despite an 8.9% decline in renewal activity during the quarter, the number of renewed contracts remains 9.5% higher than in the same period in 2025, suggesting a robust market dynamic.
Supply Constraints and Future Developments
International and local logistics firms continue to secure space and invest in new facilities, with notable developments underway in key areas. JLL points to the construction of a 20,000-square-meter Grade A logistics center in Jafza, initiated by DP World and Arcapita’s Lintara Properties, which is set to include temperature-controlled areas and dangerous-goods storage, with completion expected in Q1 2027.
While upcoming Grade A projects may alleviate some pressure on Dubai’s constrained market, JLL warns that rising construction costs could delay the completion of these developments. The ongoing shortage of modern industrial space is influencing rental performance, as businesses become increasingly selective about location and facility specifications in response to evolving logistics needs.
Abu Dhabi’s Industrial Landscape
In Abu Dhabi, the industrial market remains tight, albeit with more moderate rental growth compared to Dubai. Average industrial rents in the capital reached AED 489 per square meter, marking a 1.6% year-on-year increase. This slower growth is partly attributed to existing rent increase restrictions, although demand for prime industrial locations remains strong.
Abu Dhabi is also enhancing its logistics infrastructure to cater to the demand for advanced facilities. Recently, KEZAD Group partnered with JINGDONG Property to develop approximately 150,000 square meters of warehousing in KEZAD Al Ma’mourah, expected to be completed by 2028. This project will incorporate automated warehousing technologies and is projected to create around 1,000 jobs.
Shifting Demand Dynamics
The demand for industrial space is increasingly shaped by how companies manage their supply chains across the UAE and the broader Gulf region. Businesses are redesigning their logistics networks to enhance resilience, with multimodal transport links becoming critical in determining the locations of logistics operations. JLL highlights the development of the AD Ports Group-Etihad Rail bonded corridor as a significant infrastructure project that could improve overland transport across the GCC in the long term.
The UAE’s industrial market is thus supported by ongoing business expansion and a structural shift towards more sophisticated logistics networks. Other property consultants, such as CBRE, have noted similar trends, emphasizing that constrained Grade A supply and heightened competition among occupiers are driving rental growth in the country’s primary logistics hubs.
For further insights, refer to the full report by JLL on the UAE industrial market dynamics.
According to Economy Middle East, the industrial sector’s resilience is indicative of broader economic trends in the UAE.
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