Industrial & logistics leasing grew 26% year-on-year: report

Industrial and logistics (I&L) leasing grew 26% year-on-year to 8 million square feet from January-March 2023, while supply grew 28% year-on-year to 7.6 million square feet during that period, according to CBRE.
During the January-March 23 period, Delhi-NCR advanced absorption activities with the leasing of 1.7 million square feet, followed by Hyderabad with 1.5 million square feet and Ahmedabad with 1.2 million square feet. The leasing share of these three cities in the total leasing was 54%. The collective share of Chennai, Kolkata and Hyderabad in the supply expansion was 59% from January to March 23.

According to the report, 3PL had a majority stake in leasing at 43%, while the share of e-commerce companies improved, standing at 15% in the January-March 23 period. Retail and engineering and manufacturing companies each accounted for an 11% share of leasing, followed by automotive and ancillary companies at 8%.

Overall, domestic companies had a leasing share of 61%, American groups a share of around 17%.

“We expect rental momentum in I&L to remain strong in 2023 with demand of 32-35m. square ft. and would grow 1–5% annually. Despite macroeconomic uncertainties, the I&L sector posted robust growth in the first quarter of 2023,” said Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE.

“We expect supply to increase 15-24% year-on-year to 24-26 million. square ft. upon release of pent-up stock. We’re also seeing increasing demand from the FMCG, retail, and electronics and electrical sectors, while 3PLs and engineering and manufacturing companies will continue to be the key drivers of the leasing momentum this year,” the magazine said.

Increasing user requirements will expand storage areas and improve storage efficiency, which is likely to increase the need for high-quality storage facilities.

Occupiers prioritize prime locations, but a lack of ready-to-occupy supply would lead to a shift in focus to secondary locations, allowing them to take advantage of comparatively low rents.

“We anticipate that increasing user demand for improved storage space and storage efficiency will lead to a growing need for superior storage facilities. Additionally, occupier desire to achieve operational efficiencies and reduce costs in a multi-user facility is expected to drive demand for large spaces (greater than 100,000 square feet),” said Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India.

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