In 2022, there was an 8% year-on-year increase in demand for industrial and warehousing space, totalling 24.5 million square feet across India's top 5 cities. The average quarterly leasing was strong, reaching 6.1 million square feet, up from 5.7 million square feet in 2021. Third-party logistics companies were the biggest occupiers of warehousing space, making up 44% of total demand in the sector. The growing consumer demand has led to more leasing by 3PLs, e-commerce, and retail companies. Meanwhile, there has been a rise in demand for space from engineering firms as well. Positive market sentiment is expected to continue.
In 2022, there was an 8% year-on-year increase in demand for industrial and warehousing space, totaling 24.5 million square feet across India's top 5 cities. The average quarterly leasing was strong, reaching 6.1 million square feet, up from 5.7 million square feet in 2021. Third-party logistics companies were the biggest occupiers of warehousing space, making up 44% of total demand in the sector. The growing consumer demand has led to more leasing by 3PLs, e-commerce, and retail companies. Meanwhile, there has been a rise in demand for space from engineering firms as well. Positive market sentiment is expected to continue.
Delhi-NCR had the highest demand, accounting for 36% of total leasing, followed by Pune at 23%. Delhi-NCR's Tauru Road and Luhari saw the most demand, while Bhamboli continued to be a popular choice in Pune. The fundamentals of India's industrial demand remain strong, and the government's Production Linked Incentive programs for key sectors are expected to further boost local production and demand for organized industrial and warehousing spaces. The "China plus one" strategy, in which global companies are shifting their focus to India for de-risking purposes, is also gaining momentum.
The logistics sector in India continues to grow due to the emphasis on companies adapting to changing consumer behavior. The growth of e-commerce and the need for last-mile connectivity in Tier I and Tier II cities have increased demand for warehousing space. In 2022, demand from engineering and electronics firms increased by more than 2X, accounting for 28% of leasing, up from 13% in 2021. Delhi-NCR and Pune were the most popular locations for these companies, who tended to take up larger spaces (over 100,000 square feet) as they expanded their operations.
Despite the robust demand in 2022, the markets faced supply restrictions. New supply was down 20% YoY, totaling 19 million square feet, as developers were cautious about building new space due to volatile construction costs and waited for pre-commitments. This resulted in lower vacancy levels and increased rentals. Rentals are expected to firm up in the coming quarters, although this will depend on the economic and business environment. There will be a focus on sustainability and technology adoption for greater operational efficiency going forward.
Advertisement
Facebook
Whatsapp
