Demand for warehouses in the industrial areas has been affected by the economic slowdown but some traders are finding it difficult to secure storage space due to slow movement of goods at retail outlets and dwindling re-export orders.
Demand for warehouses in Al Quoz, Al Qusais, Dubai Investment Park (DIP) and other areas that are closer to the Jebel Ali Free Zone and port area has become flexible as new facilities added in these areas are available at discounted rates.
An agent leasing warehouses in different locations in Dubai said a warehouse in DIP is available for as low as Dh20 per square foot compared to Dh60 to Dh70 per sqft previously in some of the preferred locations.
"We have a spacious warehouse of 121,000 sqft for an annual rent of Dh2,475,000 at the rate of Dh20 per sqft. The maintenance cost is borne by the landlord.
Before the international economic crisis demand for warehouses far exceeded supply but recently many new facilities have entered the market.
The demand for warehouses in DIP was earlier much higher than the supply.
Sources at Ready House, an agent, said a 4,000 sqft warehouse in the Al Quoz/Al Barsha area is now available for Dh35 to Dh40 per sqft compared to Dh60 to Dh70 that prevailed earlier.
"We are ready to negotiate for leasing this warehouse, which is five years old and has been used by another client," he said.
Some commodity traders who are stuck with costly inventory are clearing out the warehouses by selling at discounts.
Shamsuddin Ahmed, Regional Director, Ceva Logistics, said demand for warehouses will continue to go up because many cost conscious companies and trading houses that currently manage inhouse logistic infrastructure will start outsourcing.
"The warehouse rate has come down in some areas, but the rate in Jebel Ali and other important areas has not been much affected. Companies will turn to outsourcing logistics management. Warehouse demand will continue to remain stable. Traders who currently maintain their own logistics and distribution network will outsource the same and concentrate on their core business of trade," he said.
A warehouse owner in Ajman said he has two new facilities in Ajman industrial area for lease at the rate of Dh85,000 per year. Last year, the rate for the same warehouse was Dh90,000.
Another agent said warehouses are available at comparable rents in Al Qusais industrial area.
A source from Diamond City said warehouses are available in Ajman at Dh20 to Dh35 per sqft and Dh45 per sqft in Dubai. The source said warehouse demand has not been much affected by the slowdown, but warehouse owners are ready to negotiate the rates.
Nanoo Viswanathan, General Manager, Nashwan Land Transport, said demand for warehouses is declining because the volume of cargo arrival has come down and orders for re-exports to other parts of the Middle East and Africa has declined.
"Some traders have to find space to keep their inventories because the movement of goods has been slow. The volume is normally low during and after the Iranian New Year and Easter holidays," he added.
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