Industrial and Warehousing Leasing Demand Witnesses a Rise of 11% YoY in Q1 2023: Report

Demand Driven by 3PL and E-commerce Sectors in Major Indian Cities

According to a recent report by Colliers India, the demand for industrial and warehousing space in five major Indian cities witnessed an 11 percent year-on-year (YoY) rise, reaching 7.2 million square feet (msf) during Q1 2023. The surge in demand can be attributed to the growth of third-party logistics (3PL) and e-commerce sectors. Delhi-NCR remained the leader in demand with a 29 percent share, followed by Mumbai.

The report indicated that 3PL players accounted for 41 percent of the demand, followed by the fast-moving consumer goods (FMCG) sector at 12 percent. The retail and FMCG sectors saw a three-fold rise in demand YoY as they expanded their presence in larger markets such as Delhi-NCR and Mumbai. This increase in industrial warehousing space uptake aligns well with the growth in private consumption in the domestic economy.

Mumbai experienced a 37 percent YoY increase in leasing, driven primarily by 3PL operators who continued to expand in the city despite weaker economic and business sentiment. The Tauru road and NH 48 in Delhi-NCR, and Bhiwandi in Mumbai, remained attractive markets during the quarter.

However, Bengaluru witnessed an 18 percent dip in the gross absorption of Grade A space compared to the previous year. Supply across the top 5 cities declined by 8% YoY, totaling 5.8 million sq ft, as developers remained cautious in response to the evolving demand scenario. Higher raw material prices and increased logistics costs also affected new project completions across major markets.

The report also stated that due to limited available supply and strong demand, vacancy levels across the top five cities decreased by 170 basis points YoY during Q1 2023 to 8.1 percent. Rental rates in top micro-markets witnessed an annual increase, with Chakan in Pune and Bhiwandi in Mumbai among the key micro-markets that saw rental upticks of 14 percent and 6 percent, respectively.

Here are some relevant news headings and tags for the news:

Key Highlights of Colliers India Report on Industrial and Warehousing Demand in Q1

Third-Party Logistics Firms Drive Demand for Industrial and Warehousing Space

Delhi-NCR Continues to Lead in Demand, Mumbai Sees Strong Growth

Bengaluru Witnesses Dip in Gross Absorption, Supply Declines Across Top Cities

Rental Rates Increase in Top Micro-Markets, Vacancy Levels Decrease

Developers Expected to Continue Exercising Caution in Supplying the Market