Demand for warehouses may reach a five-year high in 2023 as various companies look to take up more space ahead of the festive season. According to CBRE, the Industrial & Logistics (I&L) sector is likely to touch a 5-year high absorption mark and touch 36 – 38 million sq ft in 2023 across the top 8 cities in India.
“With the surge in quality supply additions, robust festive demand, and the completion of pent-up projects, we anticipate the overall absorption to touch a 5-year high, reaching an impressive 36-38 million square feet by the end of 2023. The active participation of larger developers backed by institutional funds, contributing around 40% to the completed projects, underscores the sector’s growth potential,” said Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE.
Supply addition, too, is expected to outperform, touching 35 – 37 mn. sq. ft. by the year-end, driven by the completion of pent-up projects.
In 2019, 31 million sq ft was leased which dipped to 20 million sq ft in 2022 but is on the rise since then.
The leasing in the I&L sector grew by 13% Y-o-Y in the Jan-Sep’23 period. The total absorption across the top 8 Indian cities stood at 27.3 million sq ft, compared to 24.2 million sq ft. in Jan-Sep’22. Mumbai, Chennai, and Delhi-NCR collectively accounted for a share of 56% in the leasing activity during the Jan-Sep’23 period.
During the Jan-Sep’23 period, third-party Logistic (3PL) players dominated leasing with a 45% share, followed by engineering & manufacturing (E&M) companies (15%), auto & ancillary (7%), FMCG (6%) and electronics (5%). Supply addition was registered at 28 million sq ft., recording a 57% Y-o-Y increase in Jan-Sep’23.
A combined contribution of 56% has been recorded in supply additions during the Jan-Sep’23 period from Delhi-NCR, Chennai, and Kolkata collectively.
As per the regional trends, domestic corporations took the lead in leasing activities with a 59% share, followed by EMEA corporations at 25% and APAC corporations at 12% during the same period.
“We also anticipate a surge of interest from FMCG, retail, and electronics & electrical sectors, driven by consumer demand,” said Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India.
