Leasing of industrial and warehousing space rose 11 per cent year-on-year to 7.2 million square feet during the January-March period across five major cities on higher demand from third-party logistics and e-commerce firms, according to Colliers India.
Real estate consultant Colliers tracks the demand and supply of premium industrial and warehousing spaces, which are primarily being developed in the adjoining micro-markets of five major cities — Delhi-NCR, Bengaluru, Mumbai, Pune and Chennai.
The January-March period saw the highest leasing compared to the previous eight quarters.
“This sustained streak in leasing was backed by 3PL (third party logistic) operators who continued to expand across large markets, forming 41 per cent of total leasing during the quarter. This was distantly followed by the FMCG sector at 12 per cent,” Colliers said.
Interestingly, demand from retail and FMCG sectors saw a three-fold rise YoY (year-on-year), as they expanded their footprints in larger markets such as Delhi-NCR and Mumbai.
As per the data, the leasing of warehousing space in Delhi-NCR rose 22 per cent to 2.1 million square feet in January-March, from 1.7 million square feet in the same period last year.
Mumbai saw 37 per cent increase to 1.8 million square feet from 1.3 million square feet, while Chennai witnessed 38 per cent to 1 million square feet from 0.7 million square feet.
However, the demand declined in Bengaluru and Pune.
Leasing of industrial and warehousing space in Bengaluru fell 18 per cent to 0.7 million square feet from 0.9 million square feet.
In Pune, the leasing fell 15 per cent to 1.6 million square feet in January-March from 1.8 million square feet in the year-ago period.
As per the report, Colliers said that in the Mumbai region Bhiwandi (Mankoli, Vadape, Padgha, Vashere) is a major hub for industrial and warehousing parks.
In Delhi-NCR, Sonipat and NH-48 (Gurugram-Binola, Pataudi Road, Jamalpur- Panchgaon Road, Bilaspur-Tauru Road, Dharuhera) are major micro-markets.
Around Chennai, Oragadam and NH-16 (Chennai Kolkata Highway — Gummidipoondi, Sricity, Redhills, Poochiathipedu, Periyapalayam and Vishnuvakkam) house warehousing parks.
In Bengaluru, Hoskote-Narsapura and Anekal are major hubs, while Chakan and Talegaon are major areas near Pune.
Unlike demand, Colliers pointed out that new supply across five major cities declined 8 per cent YoY at 5.8 million square feet, as developers remained watchful of the evolving demand scenario.
“Higher raw material prices and increased logistics costs also impacted new project completions across major markets. Over the next few quarters, developers will continue to remain cautious and are likely to bring in supply to meet market demand, keeping market fundamentals intact,” the consultant said.
Owing to limited available supply and robust demand, vacancy levels across these five cities dropped by 170 basis points YoY during January-March 2023 to 8.1 per cent.
Majority of the markets, except Delhi-NCR, saw single digit vacancy levels, backed by steady demand from 3PL, FMCG and engineering companies.
“With demand being upbeat amidst limited supply, rentals across top micro-markets saw an annual rise. Chakan in Pune, and Bhiwandi in Mumbai were some of the key micro markets which saw an uptick in rentals by 14 per cent and 6 per cent, respectively,” Colliers said.
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