RIYADH: Saudi Arabia’s industrial occupancy exceeded 90 percent across key markets in the second quarter, while the number of industrial establishments rose to 13,660 in April, JLL said.
Occupancy in Riyadh, Jeddah and the Dammam Metropolitan Area remained above 90 percent, supported by lease renewals and continued absorption of industrial and logistics space despite regional disruptions, according to JLL’s KSA Industrial Market Dynamics Q2 2026 report.
The Kingdom’s industrial base expanded to 13,660 establishments in April, from 12,289 a year earlier, as 322 new industrial licenses were issued and 188 factories began production. JLL said the expansion is generating additional demand for industrial and logistics space.
The expansion reflects Saudi Arabia’s broader push to increase manufacturing capacity and attract investment into higher-value industries. Under the National Industrial Strategy, the Kingdom aims to increase the number of industrial plants to about 36,000 by 2035, up from 7,206 in 2016, while Vision 2030 is focused on expanding production, strengthening local content and deepening the integration between manufacturing and logistics.
Saud Al Sulaimani, CEO and head of capital markets – KSA at JLL. Supplied
Saud Al Sulaimani, CEO and head of capital markets – KSA at JLL, said: “The resilience and adaptability of the Kingdom’s logistics sector, backed by national directives and strategic port infrastructure investments in line with Vision 2030 goals, have strengthened Saudi Arabia's strategic position as a global trade hub.”
He added: “This structural demand, including enhanced capacity of the Kingdom’s Red Sea ports, are creating a dependable ecosystem for investment and growth, and fueling interest in premium, strategically positioned logistics spaces, even amidst broader macroeconomic uncertainties.”
Rental rates increased across all three markets, with the Dammam area recording the largest rise at 6.9 percent. Average rents climbed by 4.8 percent in Jeddah and 3.9 percent in Riyadh, where Industrial Gate City recorded the capital’s highest rate at SR300 per sq. meter annually.
Cargo shifts west
JLL said Strait of Hormuz-related disruptions redirected cargo toward Saudi Arabia’s western ports during the second quarter, including Jeddah Islamic Port and King Abdullah Port in Rabigh.
The shift prompted companies to reconsider their dependence on individual trade corridors and increased demand for industrial and logistics facilities connected to the Kingdom’s multi-port network, according to the report.
Mediterranean Shipping Co. launched a new service in May with the Europe–Red Sea–Middle East Express. The service connects European ports directly with King Abdullah Port, Jeddah and Aqaba, with onward multimodal links to the UAE and other Gulf markets.
Its eastbound route includes Gdansk, Klaipeda and Bremerhaven, as well as Antwerp, Valencia, Barcelona, Gioia Tauro and Abu Qir before reaching the Saudi ports and Aqaba. The first sailing was scheduled to depart Antwerp on May 10.
JLL expects freight costs to remain elevated in the near term because of the operational disruptions. However, it said western Saudi ports are expected to retain a portion of the diverted trade flows after regional conditions normalize, supporting longer-term demand for nearby warehousing and logistics facilities.
Tight supply
Occupancy across the Kingdom’s principal industrial markets is expected to remain high over the near to medium term. Planned developments could ease pressure in selected submarkets, but JLL does not anticipate a significant shift away from conditions favoring landlords in the short term.
