Strong demand drives industrial and warehousing leasing by 9% YoY

New Delhi, Oct 18 (KNN) During January-September 2022, the industrial and warehousing demand across top five cities witnessed a 9 per cent rise on year on year basis, recording a total gross absorption of 17.5 million square feet (mn sq ft), according to an analysis by colliers.

The demand remained resilient during the third quarter of this year as well at 6.7 mn sq ft, highest since the first quarter of 2021. By far, the Third-party logistics players (3PLs) remain the top occupiers of warehousing space, contributing to over half of the total warehousing demand till date, the analysis said.

Improved retail market sentiment amidst festive season and higher online spending continue to support warehousing growth and are expected to boost short-term demand.

The demand was led by Delhi-NCR region during YTD 2022at 39 percent share, followed by Pune at 21 percent backed by robust demand from 3PL players, engineering and 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, it said.

Speaking about the report analysis, Shyam Arumugam, Managing Director, Industrial & Logistics Services, Colliers India, said “Continued leasing momentum is expected in the warehousing segment with various retail clients in active discussions to consolidate their foothold in large-size mega distribution centres. As far as the macro environment goes, the unveiling of the National Logistics Policy by the prime minister 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,” he said.

New supply weakened during this year so far at 15 mn sq ft, declining 20 percent YoY as developers remained cost-cautious waiting for input pricing to reduce further and this led to delay in project completions.

Amidst moderate supply and robust demand for industrial and warehousing facilities, overall vacancy levels lowered by 0.7 percentage point 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.

“India’s warehousing sector is gradually picking up pace with massive growth in 3PL logistics. 3PL players contributed to half of the total warehousing demand during the year so far with an average deal size of 1.1 lakh sq ft. About 75 per cent of the leasing by 3PL logistics was through large deals,” says Vimal Nadar, Senior Director, Colliers India.  (KNN Bureau)