Industrial & warehousing demand at 22 million sq ft. in 2021: Colliers

industrial and warehousing demand at 22 million sq ft in 2021

The year 2021 saw leasing of about 22 million sq feet across warehousing and industrial facilities in the top 5 cities, steered by robust warehousing demand from the E-commerce segment and strong production growth. Demand for high-quality warehousing space was steered by 3PL (Third party logistics) players with a 33% share, followed by e-commerce companies with a share of 29% in total leasing.

During the year, Delhi-NCR continues to lead industrial and warehousing demand with a share of 29%, followed by Pune and Mumbai at 21% and 20% each respectively. The majority of the space off-take was for warehouses, followed by industrial sheds.

“Robust leasing momentum was witnessed in 2021 irrespective of the fact that the Covid-19 situation continues to evolve. Supply introduction in most markets is witnessing a strong revival in spite of material price escalation continuing to be a challenge. The Grade A absorption across key cities stood at 22 million sq ft with E-commerce and 3PL sectors once again dominating the space uptake. We are witnessing industrial demand pick up across cities such as Chennai, Pune and Delhi-NCR. We are also witnessing active leasing inquiries in emerging Tier II markets on account of the need for last mile delivery for customers.” 

Shyam Arumugam, Managing Director, Industrial and Logistics Services, Colliers India
CityH1 2021H2 2021% Change (half yearly)
Delhi NCR9.52.4-75%
SUPPLY (in million sq ft)
CityH1 2021H2 2021% Change (half yearly)
Delhi NCR3.03.516%
GROSS ABSORPTION (in million sq ft)

Grade A industrial and warehousing supply during the year rose 8% to 24 million sq feet, led by higher building completions in Delhi-NCR and Chennai. pan-India Grade A vacancy dropped over six months, standing at 11.5% from 12.2% in June 2021. This was led by lower-than expected new supply, and robust leasing in Grade A properties.

“Occupiers are preferring Grade A properties with good eaves height and compliance. Almost 66% of total leasing was witnessed across Grade A industrial and warehousing facilities indicating increased inclination for high-grade structures. In-city warehousing, smaller fulfillment centers are high in demand in top metro cities as delivery timelines become shorter from same-day delivery to a few minutes’ delivery for essentials.”  

Vimal Nadar, Senior Director, Research, Colliers India

E-commerce demand share at 29%; grocery e-commerce players taking up spaces

E-commerce companies leased 6.6 million sq feet of warehousing space during 2021, accounting for 29% share. The share was led by the large spaces that e-commerce companies typically take up for their fulfillment centers. Interestingly, about 14% of the e-commerce deals were from pure-play grocery/food retailing companies. Such companies are also taking up space for in-city warehousing- closer to demand hubs as they focus on 30-minutes deliveries in large cities.

Delhi-NCR continues to be market leader in industrial demand

Delhi-NCR led leasing activity with total leasing of 6.5 million sq feet during 2021. In NCR, NH8 cluster was the most preferred cluster for industrial space during 2021. Pune came in second in terms of leasing and accounted for 21% of the pan-India leasing. Demand here was led by automobile companies, followed by E-commerce companies. This year witnessed several new entrants in the automobile space, who preferred the Chakan-Talegaon cluster for the facilities.

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