Demand Outstrips Supply in Dubai's Industrial and Logistics Market
ndustrial and logistics occupiers are increasingly targeting smaller units and looking beyond traditional Dubai and Abu Dhabi hotspots as intense competition for limited new supply continues to drive up rents, according to the H1 2025 Dubai and Abu Dhabi Industrial Markets Review report by global property consultancy Knight Frank.
The report reveals how industrial rents have risen across the emirates in H1 following a record-breaking 2024, during which industrial and logistics space requirements in Dubai rose by 225% to reach 40.6 million sqft.
Faisal Durrani, Partner – Head of Research, MENA, said, "Overall, upward rental pressure remains high, especially in well-established submarkets. These increases reflect strong occupier appetite for well-located industrial stock, while availability remains limited. Occupiers are also becoming more strategic, with a growing preference for mid-sized units. The 25,000-50,000 sqft band, for instance, has now become the most sought-after, reflecting a shift from the larger spaces favoured in 2024 and also the lack of larger units."
Al Quoz remains the highest-priced location, with grade-A rents of AED 85 psf in Q2 2025, marking a 31% year-on-year increase. Grade-B stock in the same area commands AED 58 psf, up 21% year-on-year.
Dubai Investments Park saw one of the steepest annual uplifts, with average rents up 33% over the year to AED 60 per sqft, underscoring its position as a key logistics and distribution hub.
In Abu Dhabi, KEZAD Musaffah (ICAD) and Musaffah were standout performers, recording year-on-year rent increases of 57% and 52%, respectively. Al Markaz saw a 14% year-on-year increase, with rents holding at AED 375 psm in Q2 2025, up from AED 330 psm at the same point last year.
As supply tightens in Dubai, occupiers are actively exploring alternative emirates, such as Umm Al Quwain. This has caused industrial and logistics rents in the Northern Emirates to rise rapidly – up by 40% year-on-year, from around AED 25 psf to AED 40 psf.
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