The latest Industrial Market Performance report for summer 2016 from Cushman & Wakefield Core reveals the global trade volume and continuing oil price fluctuation is impacting demand for industrial and warehousing real estate.
Cushman & Wakefield Core Dubai CEO David Godchaux said: "Many of the existing occupiers are trying to optimize current footprint and evaluate relocation costs while new entrants are generally cautious when undertaking their first phase expansions in the region.
“This has led to a marginal release in supply, albeit mostly in the Grade B category. Ready built Grade A stock continues to attract tenants while large logistics requirements are purpose built and are mostly positioned in the newer submarkets."
The research also discovered that there is a measurable gap existing between retail rates Grade A and Grade B stock, which is attributed to scope for special and infrastructure expansion, ease of access and build quality.
"Al Quoz saw its overall rents depreciate by 8% year-on-year (yoy), while Ras Al Khor witnessed a 5% dip yoy. Jebel Ali Freezone Authority witnessed a 9% year-on-year softening in its overall rentals, however, the spill-over of smaller and on-shore requirements is largely catered by the Jebel Ali industrial area as it offers supply in all formats and sizes such as manufacturing, warehousing and land plots, but with predominantly Grade B build quality," explains Mr Godchaux.
Dubai's new manufacturing is most active between the industrial zone within Dubai Investments Park (DIP) and Dubai Industrial City (DIC). DIP caters to tech manufacturing and warehousing requirements while DIC offers industrial zones and land leases for self-build purposes appealing to end users.