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Real Estate: Strong Demand Drives Industrial, Warehousing Leasing by 9% YoY, Says Colliers

Industrial and warehousing demand in India witnessed a 9 per cent YoY rise during January-September 2022 with a total gross absorption of 17.5 million square across feet in the top-five cities in India. Demand remained resilient during the third quarter as well, at 6.7 mn sq ft, the highest since Q1 2021, according to a report by Colliers.

It said, “Third-party logistics players (3PLs) remain by far the top occupiers of warehousing space, contributing to over half of the total warehousing demand till date. Improved retail market sentiment amidst festive season and higher online spending continue to support warehousing growth and is expected to add to short-term demand addition.”

The report added that Delhi-NCR led the demand during YTD 2022 at 39 per cent share, followed by Pune at 21 per cent share in total leasing backed by robust demand from 3PL players, engineering & e-commerce players. Tauru road and Luhari remained the most active micro-markets in Delhi-NCR, while Chakan-Talegaon continued to attract industrial occupiers in Pune.

Shyam Arumugam, managing director (industrial and logistics services) of Colliers India, said, “Continued leasing momentum is expected in the warehousing segment with various retail clients in active discussion to consolidate their footprints in large-size mega distribution centres. As far as the macro environment is concerned, the unveiling of the National Logistics Policy by Prime Minister (Narendra Modi) is one of the key milestones for this sector and is expected to have a great positive impact on the logistics sector in the medium to long term. Large deals will continue to drive the warehousing market as e-commerce and 3PL players plan remarkable expansion to enhance efficiency.”

It added that new supply weakened during YTD2022 at 15 mn sq ft, declining by 20 per cent YoY as developers remained cost cautious waiting for input pricing to reduce further and this leads to delay in project completions.

“Amidst moderate supply and robust demand for industrial and warehousing facilities, overall vacancy levels lowered by 0.7pp during the quarter. Rents are likely to firm up in the next few quarters across preferred micro markets in key cities owing to strong demand and limited availability of quality supply,” Colliers said in the report.

Vimal Nadar, senior director of Colliers India, said, “India’s warehousing sector is gradually picking up pace with massive growth in third-party logistics. 3PL players contributed to half of the total warehousing demand during YTD2022 with an average deal size of 1.1 lakh sq ft. About 75 per cent of the leasing by 3rd party logistics was through large-sized deals.”

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