Rerouted cargo is pulling UAE warehouse demand toward the Northern Emirates and the east coast, while Dubai tenants stay put

Cargo rerouted around Hormuz is redrawing the UAE’s warehouse map, pulling some demand toward the Northern Emirates and the east coast while most Dubai occupiers sit tight. Warehouse renewals jumped 21.6% to a record high of about 8.2k in 1H 2026, even as rents climbed another 12.4% and new warehouse contracts fell 51.8% y-o-y, according to Cavendish Maxwell data we reported in September. Industrial and logistics requirements reached 12.3 mn sq ft, up 7% y-o-y, according to August data.

Occupiers are holding off on moving or expanding. With rents high and regional trade routes unsettled, fewer are willing to relocate, take on more space or lock into another long lease.

“The demand is still there. It’s just that it’s redistributed,” JLL Head of Industrial Advisory for MEA Abhishek Mittal tells EnterpriseAM. For some tenants, renewing makes more sense, while others are looking at locations they hadn’t considered before.

Moving is expensive, even into a cheaper unit. “Suitable space is genuinely hard to find,” CBRE MENA Associate Director for Leasing and Sales Ana Worboys tells EnterpriseAM. Add fit-out, racking, downtime and workforce disruption, and moving can easily wipe out the savings. Unless an alternative is both better and future-proofed, “extending a lease for a few years is often the more pragmatic choice.”

The war gave tenants another reason to hold off on new commitments. Some smaller retailers have temporarily routed their requirements through 3PLs and cargo aggregators instead of leasing more space directly while they reassess their supply chains, Mittal says. Others are getting more out of their existing warehouses or outsourcing overflow. “The most common pattern is deferral rather than withdrawal,” Cavendish Maxwell Research Manager Ali Siddiqui says. Occupiers are right-sizing or delaying extra capacity until they can see their business volumes more clearly.

The habit predates the war. New warehouse leasing was already down 60.2% y-o-y in 3Q 2025, while renewals jumped 62.2%, according to Cavendish Maxwell figures we reported in January. Average rents were up 16.8% at the time as suitable stock became harder to replace. The war has reinforced the instinct to stay put.

Warehousing follows the rerouted cargo

Diverted shipments are changing where operators want to be. Cargo diverted through ports in the Northern Emirates and on the east coast has made facilities near those entry points more practical for some operators, Mittal says. In his view, demand is moving around the map rather than leaving the market.

Each alternative serves a different kind of tenant. Fujairah is the most direct hedge, for users who want east coast port access and routes that cut their dependence on Hormuz. Sharjah remains the obvious alternative to Dubai, thanks to its proximity and lower rents, and Ajman is gaining traction.

The space is there, and it’s getting cheaper: More than 10 mn sq ft of marketed warehouse space opened across the Northern Emirates in 1H, including 5.2 mn sq ft in Umm Al Quwain, and rents there fell 18.5% y-o-y, according to our August report. That reversed the previous year’s surge, when companies displaced by shortages in Dubai and Abu Dhabi helped push Northern Emirates rents up around 40%.

Dubai’s high rents make the rethink easier to justify. Industrial and logistics rents had been rising around 20% a year, according to CBRE, which hits 3PLs on thin margins especially hard. CBRE puts Dubai’s rent growth at around 12.3% now, which gives occupiers some breathing room but doesn’t make space cheap. Trading down isn’t always a bargain either: older warehouses can come with poorer layouts, lower eaves or weaker loading capacity that eat into the savings.

For many, Dubai is still hard to replace. Its ports, airports, free zones and the depth of its logistics networks keep the alternatives secondary for many occupiers, Siddiqui says. If Jebel Ali access, airport proximity or last-mile delivery is essential, the Dubai premium can still make sense.

The war is also adding demand for storage. Some manufacturers are holding more inventory locally and sourcing inputs closer to home to protect against supply chain disruption, Mittal says. Vacancies created early on by disrupted imports were quickly absorbed as companies adjusted.

Landlords still hold the cards

Rent growth hasn’t eased at the top of the market. Mittal estimates that only around a fifth of Dubai’s warehouse market qualifies as Grade A, and rents on high-efficiency stock haven’t meaningfully softened.

New money is coming, but not fast enough: Octo and GFH partnered to develop a USD 300 mn UAE-Saudi logistics platform in June, Lunate and Blackstone unveiled a USD 5 bn GCC logistics platform last October, and projects from Aldar-DP World, Sweid & Sweid, and others are in the pipeline. But much of that stock is pre-committed or built-to-suit. “Uncommitted supply — the kind that genuinely creates negotiating room — remains limited,” Siddiqui says. Mittal expects large-format projects to lift supply over the next one to two years.

Expect incentives before rent cuts. Siddiqui expects landlords to defend headline rents and offer concessions first, through rent-free periods, more flexible lease structures or other incentives. Rents in some areas are already stabilizing q-o-q, but neither Cavendish Maxwell nor CBRE sees enough available stock to put tenants in the driving seat.

What would tip the balance

The trigger is ready-to-occupy space in the core logistics corridors. A meaningful rise in uncommitted, ready-to-occupy space there would shift the balance, Siddiqui says. Until then, watch for incentives becoming standard rather than selective, and for rent growth slowing further. Rising vacancy would be the clearest sign that tenants have gained leverage, but it’s likely to come last.

For now, rerouted cargo is doing what new supply can’t yet do: giving occupiers a reason to look beyond Dubai. How much leverage that gives them depends on how long the disruption lasts and how much of the new space arrives empty.