Dubai’s retail and industrial markets are growing increasingly tighter, with tenants holding onto their locations amid increasing demand and more limited quality stock, according to Cavendish Maxwell’s latest Dubai Retail and Warehouse Market Performance report (pdf).

Retail occupancy is at an all-time high

Retail leasing slowed sharply in 3Q 2025, falling 32.2% y-o-y as well-located space dried up, while renewal contracts rose 6.1% as tenants prioritized holding onto proven locations over testing new ones.

Occupancy is enforcing that inertia: With major mall operators including Emaar and Majid Al Futtaim operating at around 98% occupancy, churn has become harder to execute in practice. Near-full utilization is limiting retailers’ ability to relocate — and shifting negotiating power firmly toward landlords.

This has hiked rental rates by around 7% to 15% across key districts, Cavendish Maxwell said, while transactions rose 78.7% q-o-q and 27.2% y-o-y, pushing quarterly transaction value past AED 1.1 bn for the first time. Growth was driven largely by off-plan transactions, up 64.7% y-o-y, while ready-unit volumes held steady.

What’s wrong with your local community mall?

Demand for Dubai has not softened despite the lack of stock — instead, near-capacity conditions are reshaping how brands operate. Dubai’s retail market is leaving brands with three constrained choices as competition for flagship sites intensifies: “pay a premium for prime space, accept longer waiting times, or take calculated risks in emerging community locations,” Ali Siddiqui, research manager at Cavendish Maxwell, told EnterpriseAM.

The squeeze is producing a split between “destination brands, who are waiting for space in flagship malls,” and “daily-life brands, which are now targeting community malls.” As flagship supply hardens, centers such as Circle Mall and City Center Me'aisem are drawing “wellness and health concepts, convenience outlets, specialty grocers, homegrown F&B brands, and essential services,” supported by resident-led daily footfall.

Warehousing: Scarcity with no release valve

Even tighter than retail: Industrial space is locking up faster still. New warehouse leases fell 60.2% y-o-y, while renewals surged 62.2%, highlighting acute scarcity in logistics and last-mile locations. Average warehouse rents rose 16.8% y-o-y, led by Jebel Ali at 21.3%, reflecting sustained pressure on port-adjacent supply.

Short terms dominate, for now: Lease structures remain conservative despite tightening conditions. “The majority of both new leases and renewals continue to be structured as one-year terms, accounting for around 95% of all lease activity,” Siddiqui said. Still, longer commitments are edging higher, with the share of new contracts signed for extended periods rising to 4.0% in 2025 from 3.0% the year before, signaling a gradual shift toward certainty over flexibility.

Why supply isn’t catching up

According to Siddiqui, delivery timelines are not the full story. “The more critical limitation is that much of the existing stock was not designed to meet modern logistics needs,” he said. While developers are adapting, new assets take time to deliver, and pre-leasing is already absorbing incoming supply.

Demand isn’t easing: E-commerce growth, population inflows, tourism, and Dubai’s role as a regional logistics hub continue to underpin demand across both retail and industrial segments, reinforcing a market skewed toward renewals and continuity.

Looking ahead

Cavendish Maxwell expects rental momentum across both retail and warehousing to persist into the medium term, with supply constraints likely to keep bargaining power tilted toward landlords.

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