Dubai warehouse tenants are staying put — and riding out the war before committing to more space

The war hasn’t killed demand for warehouse space in the UAE — but it is redrawing where companies want it. Warehouse renewals jumped 21.6% to a record high 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.

The reason? Demand hasn’t shifted, but what has isra occupiers’ willingness to move, expand, or lock themselves into another long lease while rents remain high and regional trade routes are unsettled.

“The demand is still there. It’s just that it’s redistributed,” JLL Head of Industrial Advisory for MEA Abhishek Mittal tells EnterpriseAM. Renewals make more sense for some tenants, while others are eyeing new locations they haven’t before.

“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 from a cheaper unit. 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 avoid fresh commitments: Some smaller retailers have temporarily routed requirements through 3PLs and cargo aggregators instead of leasing more space directly while they reassess their supply chains, Mittal says. Others are squeezing more out of existing warehouses or outsourcing overflow rather than adding another box. “The most common pattern is deferral rather than withdrawal,” Cavendish Maxwell Research Manager Ali Siddiqui says. Occupiers are right-sizing or delaying additional capacity until they have better visibility on business volumes.

Following the cargo

Rerouted shipments are changing the logic of location: Cargo diverted through northern ports has made facilities closer to those entry points more practical for some operators, Mittal says. He sees it as demand shifting around the map, not leaking out of the market.

Fujairah is the most direct hedge, serving a specific set of users who want east coast port access and routes that cut their dependence on Hormuz. Sharjah remains the most obvious alternative to Dubai for its proximity and lower rents, while 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, while 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%.

The conflict is also creating demand for storage: Some manufacturers are holding more inventory locally and near-sourcing inputs to protect against supply chain interruptions, Mittal says. Vacancies initially created by disrupted imports were quickly absorbed as companies adjusted.

The habit predates the conflict: 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.

And Dubai is still hard to replace — its ports, airports, freezone ecosystem, and depth of logistics networks mean alternatives remain secondary for many occupiers, Siddiqui says. If Jebel Ali access, airport proximity, or last-mile delivery is essential, paying the Dubai premium can still make sense.

High rents make that rethink easier to justify: CBRE says industrial and logistics rents had been rising by around 20% annually in recent years — particularly painful for 3PLs operating on thin margins. Growth has now moderated to around 12.3% in Dubai, giving occupiers some breathing room without actually making space cheap. And trading down to lower-cost options is not necessarily a bargain: older warehouses can come with poorer layouts, lower eaves, or weaker loading capacity that eat into savings.

Landlords still hold the cards

That slowdown hasn’t reached the top of the market: Mittal estimates only around a fifth of Dubai’s warehouse market qualifies as Grade A, and rents on high-efficiency stock have not meaningfully softened.

New money is coming, but not fast enough: Octo and GFH launched 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.

Don’t expect rent cuts first: Siddiqui expects landlords to defend headline rents and offer concessions before they lower asking prices, through rentfree periods, more flexible lease structures, or other incentives. Some areas are already seeing rents stabilize q-o-q, but neither Cavendish Maxwell nor CBRE sees enough available stock to put tenants in the driving seat.

A rise in uncommitted, ready-to-occupy space in core logistics corridors could shift the balance

What would shift the balance? A meaningful rise in uncommitted, ready-to-occupy space in core logistics corridors, Siddiqui says. Until then, watch for incentives becoming standard rather than selective and rental growth slowing further. Rising vacancy would be the clearest sign landlords have lost their grip, but it’s likely to come last.

For now, the war is doing what new supply can’t: giving occupiers a reason to look beyond Dubai. Whether that becomes real leverage depends on how long the disruption lasts and how much of the new space arrives empty. Until occupiers can credibly threaten to leave, landlords won’t have to blink.