UAE Industrial And Logistics Sector Experiences New Growth Cycle Amid Demand Surpassing Supply

Cushman & Wakefield Core's recent UAE Logistics & Industrial Market Update 2025/2026 highlights a burgeoning growth within the nation's logistics and industrial sectors, primarily driven by the imbalance between the soaring demand and the limited supply in Dubai and Abu Dhabi's key hubs. This growth signifies the UAE's increasing prominence as a vital, globally integrated logistics center, attracting significant institutional investment owing to its resilience.

In Dubai, the scarcity of Grade A properties has led to an 18% hike in rents, fueled by the continued expansion of logistics, e-commerce, and 3PL operators. The demand is particularly strong for mid-sized facilities ranging from 10,000 to 50,000 sqft, indicating a trend towards more flexible, optimally located spaces amidst a tight supply scenario.

Abu Dhabi's Logistics Landscape

In Abu Dhabi, the industrial sector is witnessing a similar upswing, with prime industrial rents experiencing a 13% year-on-year increase. Occupancy levels for Grade A stock have hit 95%, bolstered by government incentives like rental rebates and utility subsidies. This has not only attracted new international occupiers, but also underscored Abu Dhabi's strategic efforts to enhance its industrial capacity and connectivity.

Ben Rose, Director in the Capital Markets department, remarked, "Industrial real estate in the UAE has transformed into one of the region's most crucial sectors. There's significant institutional interest in logistics and manufacturing facilities, especially those that offer scale, sustainability, and are close to major transport links. Despite the scarcity of high-quality spaces, we're witnessing a record level of pre-leasing activity, which underscores the unwavering demand across the country."

Investment and Development in Dubai

Noteworthy is the influx of institutional-grade projects by developers such as Aldar, Sweid & Sweid, and Radius Group in Dubai, introducing over 7 million sqft of development expected to be delivered in the next two to three years, mainly in Al Warsan and National Industries Park. Despite this robust pipeline, the demand for pre-leasing remains high, anticipating a slight relief for tenants but also reinforcing the UAE's global logistics hub status.

Prathyusha Gurrapu, Head of Research, added, "The market's dynamics are characterized by an undersupply and ongoing momentum. Demand spans across various sectors, notably logistics, industrial production, e-commerce, and consumer goods. The significant level of speculative development pre-commitments highlights tenants’ eagerness to secure optimal spaces early, reflecting confidence in the UAE's sustained role as a major logistics center. The future growth will be shaped by new multimodal infrastructure and the expansion of key free zones."

Looking Towards the Future

The forthcoming years are expected to witness continued growth through 2026, propelled by strategic infrastructure investments such as the Etihad Rail, expansion of Al Maktoum International Airport, and enhanced connectivity of Khalifa Port. These initiatives are poised to elevate multimodal logistics across the UAE and the GCC region.

Occupiers are adjusting their strategies in response to the prevailing scarcity, with some absorbing higher costs to maintain their presence in prime locations, while others look towards more cost-effective industrial zones. Larger corporations are increasingly opting for build-to-suit developments to achieve greater control and efficiency.

Despite these adjustments, the overarching sentiment remains positive, with the UAE being the preferred hub for regional operations, valued for its connectivity, stability, and conducive business environment.