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Wed, Dec 10, 2025 | Jumada al-Thani 19, 1447 | Fajr 05:31 | DXB 
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UAE: Warehouse rents to rise by up to 10% this year
Industry executives say that most of the new demand is emerging from e-commerce, manufacturing and chemical firms
Rents of warehouses and grade A logistics facilities are expected to rise by up to 10 per cent in the UAE this year due to a shortage of Grade A units, low vacancy rate and strong demand from local and international players.
Industry executives say that most of the new demand is emerging from e-commerce, manufacturing and chemical firms.
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“All industrial areas have a shortage of Grade A logistics facilities. There is an average vacancy rate between four per cent to 2.5 per cent only. In the next 12 to 18 months, there will be some ease due to new supply,” said Kunal Lahori, director of Manrre Logistics Fund, which is incorporated in the Dubai International Financial Centre (DIFC).
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He added that there is a lot of vacancy in the low and old assets industrial areas but not Grade A assets.
“Logistics, e-commerce and multinationals want Grade A assets, and this is where the vacancy is only three per cent. Therefore, rents will increase by around 25-30 per cent in 2024 and this year there will be another five to 10 per cent increase,” he said, adding that the Al Quoz area went even higher due to low supply.
“The demand for logistics facilities from e-commerce brands is constantly growing in the region, particularly in the UAE and Saudi Arabia. It is becoming increasingly difficult to keep pace with their expansion,” Lahori said.
Some industry analysts projected that the UAE faces a supply shortage of 40 million square feet.
A report by global property consultancy Knight Frank, titled Dubai and Abu Dhabi Industrial and Logistics 2024-2025, revealed that demand for industrial and logistics real estate peaked in the final quarter of 2024, accounting for 34 per cent of the year’s total.
The report highlighted an increasing preference for larger logistics spaces. The most sought-after category was 50,000–100,000 sq ft, representing 31 per cent of new space requirements. This was followed by spaces under 25,000 sq ft and 25,000–50,000 sq ft.
Leading sectors
Knight Frank added that the manufacturing and logistics sectors led the market, comprising 15 per cent and 12 per cent of total demand, respectively. Other active industries included services, trading, construction, and automotive, each contributing 6 per cent of overall demand.
Kunal Lahori added that demand is coming from both local and international logistics players, and manufacturing and chemical companies.
“There is a shortage of warehouses in the market and tenants want warehouses. To build it takes two years, so we are trying to buy old warehouses and upgrade them across the UAE,” he added.
Doubling fund size
Established in 2018, Lahori said Manrre Logistics Fund has grown into a specialist real estate income fund focusing on industrial and logistics properties. The fund has a portfolio of 26 properties spanning over 1.5 million square feet, with a 96 per cent occupancy rate.
“Our fund size is now close to Dh500 million, and we are aiming to reach Dh1 billion soon,” said Manohar Lahori, director of Manrre.
Since its inception, Manrre claimed to have generated a total return of over 160 per cent and maintained an annual dividend payout of seven to eight per cent, despite macroeconomic challenges such as the pandemic and rising interest rates.
Waheed Abbas
Waheed Abbas is Assistant Editor, covering real estate, aviation and other business stories that directly affect the lives of UAE consumers. He frequently reports human interest stories, too.
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