E-Paper
Sign In
UAE: Industrial, logistics firms moving to Northern Emirates amidst rising rents
Companies are preferring smaller and mid-sized units due to rising rents and intense competition for limited new supply, a study says
- PUBLISHED: Tue 29 Jul 2025, 11:00 AM
Industrial and logistics companies in the UAE are increasingly looking at the Northern Emirates amidst rising rents in Dubai and Abu Dhabi.
According to the latest study released by Knight Frank on Tuesday, companies are preferring smaller and mid-sized units of 25,000 to 50,000 sqft due to rising rents and intense competition for limited new supply.
Recommended For You
Industrial rents have risen across the emirates in January-June 2025 following a record-breaking 2024, during which industrial and logistics space requirements in Dubai rose by 225 per cent to reach 40.6 million sqft.
Stay up to date with the latest news. Follow KT on WhatsApp Channels.
“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,” said Faisal Durrani, partner and head of Research, Mena, Knight Frank. Faisal Durrani, Partner – Head of Research, MENA, said:
"Due to the strong macro-economic growth of the UAE, the country has attracted large-scale and multinational manufacturing companies across various sectors."
“Industrial demand continues to be led by core sectors – logistics, manufacturing and industry, and retailers and traders remain the top three contributors to new requirements, together accounting for more than half of the total demand,” said Durrani.
“However, a lack of stock is curbing new enquiries, with 6.3 million sqft of new requirements recorded in Q1 and 5.2 million in Q2, bringing the total to 11.5 million sqft for H1 2025, down by a third on the first half of 2024 as occupiers take a ‘wait and see’ approach, while others are adjusting their size requirements and some are also opting for locations in the Northern Emirates,” he added.
New supply
The Dubai industrial market is critically undersupplied, with only 780,000 sqft of spec space expected this year, it said.
Knight Frank is tracking approximately 7.2 million sqft of new industrial and logistics space due to be delivered to the Dubai market over the next four years. The biggest milestone will be in Q3 2026, with the completion of Phase 1 of Terralogix in Warsan, Dubai’s largest private logistics park. This development will introduce much-needed scale and flexibility, with 550,000 sqft due to be completed in Phase 1. The full project will be delivered over three phases, totalling 1.8 million sqft.
In total, nearly 2.8 million sqft of new industrial and logistics space is expected to be delivered in 2026 – the largest yearly addition in recent years.
Free zones in demand
According to Knight Frank, Al Quoz remained the highest-priced location, with grade-A rents of Dh85 per sqft in the second quarter of 2025, marking a 31 per cent year-on-year increase. Grade-B stock in the same area commands Dh58 per sqft, up 21 per cent year-on-year.
Dubai Investments Park saw one of the steepest annual uplifts, with average rents up 33 per cent over the year to Dh60 per sqft.
In Abu Dhabi, Kezad Musaffah (ICAD) and Musaffah were standout performers, recording year-on-year rent increases of 57 per cent and 52 per cent, respectively. Al Markaz saw a 14 per cent year-on-year increase, with rents holding at Dh375 per square metre in Q2 2025, up from Dh330 per sqm at the same point last year.
Knight Frank pointed out that 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 per cent year-on-year, from around Dh25 per sqft to Dh40 per sqft.
Knight Frank noted that occupiers with favourable lease terms secured in recent years are opting to remain in situ, often postponing expansion plans rather than facing a market with limited options and higher rental prices. Many are waiting for a new supply expected to become available over the next two to four years.
