Dubai Warehouse Rents Surge 12.5% Amid High Retention and Smaller Space Demand
Dubai's warehousing sector recorded a total rental value of AED 1.8 billion in H1 2026, marking a 10% increase year-on-year, with average rental costs rising by 12.5% according to Cavendish Maxwell.
Dubai's warehousing sector experienced significant growth in the first half of 2026, with total rental values reaching AED 1.8 billion, a 10% increase compared to the same period last year. The average cost of renting a warehouse surged by almost 12.5% year-on-year, as reported by real estate advisory Cavendish Maxwell.
Shifting Market Dynamics
The Cavendish Maxwell report revealed approximately 10,000 warehouse leases were signed in H1 2026. Notably, renewals saw a 22% year-on-year rise, reaching a new half-year record with 8,200 contracts signed. This trend indicates a strong preference among tenants to retain existing premises rather than relocating.
Conversely, overall leasing contracts decreased by 4.5% compared to H1 2025, with new contracts experiencing a sharp decline of over 50%. Vidhi Shah, Director and Head of Commercial Valuation at Cavendish Maxwell, noted this pattern reflects a more cautious business environment where occupiers prioritise existing locations over expanding into new warehouse space due to higher costs and market uncertainty.
Demand for Smaller Spaces Drives Activity
Smaller warehouse premises continue to dominate rental activity, with nearly 70% of leases in H1 2026 being for spaces under 5,000 sq ft. More than half of these were for warehouses between 2,000 sq ft and 5,000 sq ft. Larger spaces, exceeding 10,000 sq ft, also maintained a significant market share, accounting for almost 20% of leases. The least popular size category was 5,000 sq ft to 10,000 sq ft, representing about 12% of the market.
Regional Rental Growth
Warehouse rental rates increased across all monitored locations, with Jebel Ali seeing the highest growth at 15.5%. This was followed by Dubai Industrial City at 15% and Ras Al Khor at just under 14%. While some areas showed modest quarterly increases, others experienced slight declines, suggesting a moderation in the pace of rental rate growth in certain segments. Cavendish Maxwell anticipates a more selective market in the latter half of the year, with well-located facilities continuing to attract interest, though new leasing and expansion decisions may take longer.
Questions, answered
- What was the total rental value of Dubai's warehousing sector in H1 2026?
- The total rental value for Dubai's warehousing sector in the first half of 2026 reached AED 1.8 billion, representing a 10% increase compared to the same period in the previous year.
- How much did average warehouse rental costs increase year-on-year in H1 2026?
- According to Cavendish Maxwell, the average cost of renting a warehouse in Dubai increased by almost 12.5% year-on-year during the first half of 2026.
- Which size category of warehouses saw the most leasing activity?
- Nearly 70% of all warehouse leases signed in H1 2026 were for premises measuring less than 5,000 sq ft, indicating a strong demand for smaller units.
- Which Dubai locations experienced the highest rental growth for warehouses?
- Jebel Ali recorded the highest rental growth at 15.5%, followed by Dubai Industrial City at 15%, and Ras Al Khor with just under 14% growth in H1 2026.
- What was the trend in lease renewals versus new contracts in H1 2026?
- Lease renewals increased by 22% year-on-year, reaching a record 8,200 contracts. In contrast, new contracts declined by over 50%, contributing to an overall 4.5% decrease in total leasing contracts compared to H1 2025.
This brief was summarised and rewritten by Gaia Living from public reporting. Figures and details reflect the original sources.