In Q3 2023, India's industrial and logistics sector experienced robust growth, with 11.4 million sq. ft. absorption and 17.8 million sq. ft. supply. Tier I cities dominated absorption at 78%, driven by manufacturing, 3PL, and retail demand. Tier I cities supplied 79% of the total space, emphasizing the shift to grade A structures. This reflects the rising importance of Environmental, Health, and Safety (EHS) standards in warehousing. The manufacturing sector led absorption at 33%, supported by incentives, while 3PL closely followed at 32%. Delhi-NCR topped both supply (31%) and absorption (14%), reflecting the sector's dynamic landscape.
In Q3 2023, India's industrial and logistics sector experienced substantial growth, marked by the absorption of 11.4 million sq. ft. Notably, 78% of this absorption occurred in tier I cities, with the remaining 22% in tier II and III cities. The surge in demand emanated from the manufacturing and retail sectors, coupled with sustained 3PL sector activity, according to a report by Savills India, an international real estate advisory firm. During the same quarter, the sector saw a fresh supply of 17.8 million sq. ft., with tier I cities contributing 79% (14.1 million sq. ft.) and tier II and III cities contributing 21% (3.7 million sq. ft.). This increased supply was attributed to major developers delivering projects in response to the growing demand. Grade A spaces accounted for 54% of the overall supply and 52% of the absorption in Q3 2023. Notably, in tier I cities, grade A spaces constituted 62% of the supply and 54% of the absorption, underscoring a significant shift toward graded and compliant buildings. The emphasis on Environmental, Health, and Safety (EHS) standards contributed to heightened demand for quality-compliant spaces. This trend is anticipated to lead to a transition from C and D grade spaces to grade A across the country in the coming years. The manufacturing sector played a key role, accounting for 33% of the total absorption in Q3 2023, driven by increased activity and various incentive schemes. This upward trajectory is expected to persist, with a projected contribution of over 30% to total absorption in the next two years as well. Following closely, the 3PL sector contributed 32% to total absorption in the same quarter. Other sectors contributing to demand included retail at 16% and FMCD/FMCG at 5%, while various segments, including cold storage, chemical storage, FTWZs, ICDs, and Urban Warehousing, collectively contributed around 11%. In terms of geographical distribution, Delhi-NCR claimed the top spot, contributing 31% to total supply, closely followed by Mumbai at 12%. Chennai and Bengaluru contributed 8% and 7%, respectively, to total supply. Tier II and III cities together accounted for 21% of the total supply. Regarding absorption, Delhi-NCR and Pune each held the highest contribution at 14%, trailed by Mumbai at 12%, and Bengaluru and Chennai, each at 11%, showcasing the dynamic landscape of the industrial and logistics sector in Q3 2023.
Advertisement
Facebook
Whatsapp
