Leasing activity in the industrial & logistics (I&L)sector has grown by 26% year-on-year (YoY) in the January-March period of 2023 to hit 8 million square foot (msf), shows CBRE South Asia’s latest report.
According to the report titled India Market Monitor Q1 2023, supply during the quarter increased by 28% YoY to 7.6 msf.
The absorption activity during the March quarter was led by Delhi-NCR with the leasing of over 1.7 msf., followed by Hyderabad at over 1.5 msf and Ahmedabad at more than 1.2 msf. The leasing share of these three cities in total leasing stood at 54%. The collective share of Chennai, Kolkata and Hyderabad in supply addition stood at 59% during the quarter.
The report highlight that the third-party logistics (3PL) had a majority share in leasing at 43% while e-commerce firms’ share improved and stood at 15% during the period. The retail and engineering & manufacturing firms accounted for a share of 11% each in leasing, followed by automobile & ancillary corporates at 8%. Overall, domestic firms had a 61% share in leasing while American corporations held a share of about 17%.
“We anticipate that leasing momentum in the I&L space in 2023 will continue to be strong, with a demand of 32–35 msf, and would grow by 1–5% on an annual basis. Despite macroeconomic uncertainties, the sector saw robust growth in the first quarter of 2023. We anticipate supply to grow by 15–24% Y-o-Y to reach 24-26 msf following the release of pent-up supply. We also foresee increased demand from FMCG, retail and electronics & electricals sectors while 3PL and engineering & manufacturing firms would continue to be key drivers of the leasing momentum this year,”Anshuman Magazine, chairman and CEO-India, South-East Asia, Middle-East & Africa, CBRE
“We anticipate that rising occupier demand for improved warehousing spaces and storage efficiency would translate into a growing need for superior warehousing facilities. Moreover, occupiers’ desire to achieve operational efficiency and reduce costs in a multi-user facility is projected to boost demand for large-sized spaces,”Ram Chandnani, MD, advisory & transactions services, CBRE India