{"id":89640,"date":"2025-10-16T00:00:00","date_gmt":"2025-10-16T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/logistics\/2025\/10\/16\/saudi-warehousing-space-rises-as-industrial-logistics-sectors-spur-demand\/"},"modified":"2025-10-16T00:00:00","modified_gmt":"2025-10-16T00:00:00","slug":"saudi-warehousing-space-rises-as-industrial-logistics-sectors-spur-demand","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/logistics\/2025\/10\/16\/saudi-warehousing-space-rises-as-industrial-logistics-sectors-spur-demand\/","title":{"rendered":"Saudi warehousing space rises as industrial + logistics sectors spur demand"},"content":{"rendered":"

Saudi Arabia\u2019s industrial and logistics sector expanded in 1H 2025, adding over 1.3 mn sqm of new warehouse spac<\/strong>e<\/strong>, according to Knight Frank\u2019s Saudi Arabia Industrial and Logistics Market Review for Autumn 2025. Despite this influx of supply, demand remained robust, sustaining double-digit rent growth and keeping occupancy levels high across the Kingdom\u2019s major logistics hubs.<\/p>\n

Riyadh leads with double-digit rental growth:<\/strong> The capital continued to anchor the sector\u2019s performance, with warehouse stock rising by 3.5% in 1H 2025 to reach 28.9 mn sqm, while industrial and manufacturing facilities grew by 1.4% to 16.2 mn sqm. Average industrial rents in Riyadh climbed 16% y-o-y to SAR 208 per sqm, supported by a 98% occupancy rate \u2014 indicating high tenant demand for quality space.<\/p>\n

Jeddah\u2019s growth is underpinned by port expansion: <\/strong>In Jeddah, total warehouse supply grew 1.4% to 20.1 mn sqm, while average rents increased 8% and the occupancy rate stood at 97%. Al Kawthar submarket recorded the fastest rental growth in Jeddah, up 18%, followed by Al Nakheel with 16% growth. Jeddah\u2019s performance was further buoyed by DP World\u2019s SAR 3 bn investment in the South Container Terminal of the Jeddah Islamic Port, which doubled its capacity and enhanced freight flows, reinforcing the city\u2019s strategic importance in regional trade.<\/p>\n

Dammam faces tight supply and rising rents: <\/strong>In the Dammam Metropolitan Area, warehouse stock edged up by 0.7% to 8 mn sqm. Limited new supply pushed average lease rates up by 9% y-o-y to SAR 231 per sqm, with occupancy rate at a tight 96%. Although short-term constraints are expected to persist, the long-term development pipeline remains promising, with 2.4 mn sqm of land, including an 850k sqm logistics zone set to deliver 900 light industrial units by year-end.<\/p>\n

Behind the numbers: <\/strong>Rent increases have consistently outpaced new supply due to \u201cpersistent growth in demand, especially for high-quality, modern facilities,\u201d Knight Frank\u2019s Faisal Durrani said. A \u201csubstantial pipeline\u201d of serviced land and ample zoned land availability indicate \u201csignificant capacity for future growth\u201d in the sector, he added.<\/p>\n

Where demand is flowing: <\/strong>Much of the current demand is shifting toward specialized and tech-driven facilities. Cold storage spaces catering to pharma and food supply chains are in high demand, while the expansion of global technology players<\/a> like Google, Oracle, and Huawei is fueling interest in large-scale data centers. The 3 mn sqm Special Integrated Logistics Zone at King Salman International Airport has already attracted major tenants like Apple and Shein, while areas like Taibah are expected to grow by 50% over the next three years.<\/p>\n

The government\u2019s guiding hand: <\/strong>To advance its Vision 2030 goals, the government is driving industrial expansion through targeted reforms, including the extension of the White Land Tax<\/a> to undeveloped industrial plots. This effort resulted in 585 new industrial licenses worth SAR 13.5 bn issued in 1H 2025, bringing the total number of factories to over 12.8k. The broader strategy aims to triple industrial GDP, increase the factory count to 36k by 2035, and raise the logistics sector's contribution to 10% of the national GDP from its current 6%.<\/p>\n

Foreign direct investment is increasingly concentrated in industrial clusters and digital <\/strong>platforms<\/strong> as multinational tech companies like Google, Oracle, and Huawei deepen their commitments beyond simple market entry. Global partnerships are now focused on developing advanced technology ecosystems and specialized infrastructure \u2014 an evolution that aligns with the Kingdom\u2019s ambition to position itself as a leading logistics and industrial powerhouse.<\/p>\n

Looking ahead:<\/strong> The sector is entering a defining phase of growth, with record demand for modern warehousing \u2014 especially in Riyadh, where tight supply is driving up rents, according to Knight Frank\u2019s Adam Wynne. Although 2024 saw limited new completions, development activity is set to accelerate over the next four years as developers respond to rising occupier requirements and the Saudi logistics market's increasing sophistication.<\/p>\n","protected":false},"excerpt":{"rendered":"

Demand for modern facilities outpaced the addition of 1.3 mn sqm of space, driving up rents and occupancy rates<\/p>\n","protected":false},"author":1,"featured_media":89641,"comment_status":"","ping_status":"open","sticky":false,"template":"single-feature.php","format":"standard","meta":{"_acf_changed":false,"newspack_ads_suppress_ads":false,"newspack_popups_has_disabled_popups":false,"newspack_sponsor_sponsorship_scope":"","newspack_sponsor_native_byline_display":"inherit","newspack_sponsor_native_category_display":"inherit","newspack_sponsor_underwriter_style":"inherit","newspack_sponsor_underwriter_placement":"inherit","ep_exclude_from_search":false,"_primary_brand":0,"newspack_featured_image_position":"","newspack_post_subtitle":"","newspack_article_summary_title":"Overview:","newspack_article_summary":"","newspack_hide_updated_date":false,"newspack_show_updated_date":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[221],"tags":[31,207],"brand":[],"newspack_spnsrs_tax":[],"class_list":["post-89640","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-storage-warehouses","tag-saudi-arabia","tag-storage-warehouses","wpautop","entry"],"acf":{"mongo_id":"e9f62caf-4d84-4682-87dd-a2353fd65fdb","order":"5","is_powered_by":false,"story_type":"1","photo_url":"https:\/\/ent.news\/2024\/6\/118.jpg","photo_position":"above","homepage_title":"","full_issue_title":"I 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