Dubai Industrial Demand Reaches 12.3 Million Sq Ft Despite Regional Shipping Disruption

In the first half of 2026, Dubai's industrial and logistics sector continued to thrive despite political instability affecting shipping routes via the Strait of Hormuz. According to Knight Frank's UAE Industrial and Logistics Market Review for H1 2026, occupiers have continued to explore industrial space options while improving supply chain strategies.

The review shows that only in H1 2026 there were 12.3 million sq ft new demand for industrial and logistical space as compared to 11.5 million sq ft in H1 2025. Once again it is apparent that the market of Dubai properties maintains a significant degree of stability, which is visible in its industrial sector as well. The success of the industrial activity is closely linked to the overall performance of Dubai real estate in different sectors.

Supply Chains are Changing in Response to Local Issues

Industries have reported steady activities in January and February, however, Knight Frank has observed a slowdown in decision-making process since March, due to the conflict in the region, prompting several tenants to review their growth policies, operational costs, as well as logistics. Shipping disruption within the Strait of Hormuz has motivated companies to search for alternative shipping routes. Various companies have turned to Fujairah, Khor Fakkan, and Salalah to outsource their goods.

Demand for air transport has surged, particularly among those companies that specialize in transporting high-cost goods or perishable cargo. Shifts in logistics may be affecting property investment in Dubai, particularly in terms of industrial and logistics estates. Increased demand from tenants for commercial property in Dubai has affected the state of real estate market, especially in terms of its industrial areas.

Evolving Logistics Infrastructure

Faisal Durrani, Partner – Head of Research, MENA at Knight Frank, has stated that the disruption in shipping has enhanced the search for alternative logistics solutions. A good example of this change in logistics infrastructure is the collaboration of DP World with the Port of Fujairah aimed at developing two deep-water ports at the east coast of the UAE.

Mr. Durrani further mentioned that rental performances gradually become more fragmented since occupiers attach more importance to the following aspects:

• Location
• Building quality
• Specifications of facilities
• Overall value

From the broader market perspective, it becomes evident that rental performance starts to depend on particular characteristics of the particular industrial submarket. This emerging trend is influencing the Dubai real estate market as occupiers becoming more selective when making real estate leases. Simultaneously, demand on commercial property for sale in Dubai remains stable.

Manufacturing Continues to Influence Demand

Manufacturers and industrial companies have accounted for the biggest share of the demand for industrial goods and logistics in the first half of 2026.

The breakdown of sector demand:

• Manufacturers and industrial operators: 35.1%
• Logistics operators: 15.5%

Both sectors were responsible for around half of the demand for industrial goods and logistics in Dubai during this period. In addition, industrial activities can continue to be observed in Jebel Ali, Dubai South, Dubai Industrial City, Al Quoz, and Ras Al Khor, which highlights the diversity of Dubai's industrial sector. The ongoing progress of industrial companies contributes to the long-term real estate investment Dubai in the area of logistics developments. It also guarantees the stability of the best real estate in Dubai that is aimed at industrial and commercial activities.

Demand Changes to Larger Facilities

Knight Frank noted the growth of demand for larger warehouse properties as companies went through their long-term operational requirements.

Number of warehousing space needed in H1 2026 included:

• Floor area of 10,001–50,000 sq ft: 35.5% of the total demand
• Floor area of 50,001–100,000 sq ft: 32.2%
• Floor area of more than 100,000 sq ft: 27% from 7.8% in H2 2025

As Adam Wynne MRICS, Partner – Head of Commercial Agency, UAE explained, the requirement of 12.3 million sq ft is an indicator that the fundamentals of a sector are intact. He also stated that tenants take more care about their choice of efficient and modern properties located in strategic positions and are considering all costs in detail, as well as the possible disruptions affecting the region.

This constant demand is also able to influence the revival of interest to warehouses for sale in Dubai on part of manufacturers and logistics firms. Companies making efforts to get operational freedom are also using the chance of looking into warehouses for rent in Dubai in established industrial corridors.

Rental Performance Varies Across Dubai

Rental growth in Dubai's industrial sub-markets differed during the first half of 2026.

The important highlights of rental include:

• In Al Quoz, Grade A rentals averaged AED90 ($24.50) per sq ft – a year-on-year growth of 6%.
• At Dubai South, rentals grew 22% to AED55 ($14.97) per sq ft, this showing the most increase.
• Dubai Industrial City recorded 16% in rental growth.

The report mentions that occupiers are preferred as they put more emphasis on location, asset quality, and efficiency when it comes to rental performance. The changing nature of the industrial sector has given rise to demand for commercial properties for rent in Dubai in logistics hubs with transport links. Strong levels of business activity contribute to increasing confidence in luxury properties for sale in the real estate sector, even though industrial and residential properties differ in terms of their investment purposes.

Dubai's Industrial Market Outlook

The industrial industry in Dubai has shown resilience through the regional shipping disruptions and the new supply chain techniques. Although companies are becoming more careful in their expansion strategies, the demand for contemporary industrial property remains high, owing to the improvement in infrastructure and logistics networks.

As companies adapt to new trade routes, they can seek assistance from skilled real estate brokers in Dubai to find industrial property suitable for their business needs and expansion. The increasing industrial and logistics activities also positively influence the larger properties for rent in Dubai by contributing to the establishment of business centers and job clusters in the emirate.

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