Industrial and warehousing demand rose nine percent year on year recording a total gross absorption of 17.5 million square feet (mn sq ft) for January-September across top five cities in India, an analysis by Colliers showed.
Demand remained resilient during the third quarter of this year as well at 6.7 mn sq ft, highest since the first quarter of 2021. Third-party logistics players (3PLs) remain by far the top occupiers of warehousing space, contributing to over half of the total warehousing demand till date.
Improved retail market sentiment amidst festive season and higher online spending continue to support warehousing growth and are expected to boost short-term demand.
Delhi-NCR led the demand during year-to- date at 39 percent share, followed by Pune at 21 percent backed by robust demand from 3PL players, engineering and e-commerce players. Tauru road and Luhari remained the most active micro-markets in Delhi-NCR, while Chakan-Talegaon continued to attract industrial occupiers in Pune, the analysis said.
“Continued leasing momentum is expected in the warehousing segment with various retail clients in active discussions to consolidate their foothold in large-size mega distribution centres. As far as the macro environment goes, the unveiling of the National Logistics Policy by the prime minister is one of the key milestones for this sector and is expected to have a great positive impact on the logistics sector in the medium to long term. Large deals will continue to drive the warehousing market as e-commerce and 3PL players plan remarkable expansion to enhance efficiency,” said Shyam Arumugam, Managing Director, Industrial & Logistics Services, Colliers India.
New supply weakened during this year so far at 15 mn sq ft, declining 20 percent as developers remained cost-cautious waiting for input pricing to reduce further and this led to delay in project completions. Amidst moderate supply and robust demand for industrial and warehousing facilities, overall vacancy levels lowered by 0.7 percentage point during the quarter. Rents are likely to firm up in the next few quarters across preferred micro markets in key cities owing to strong demand and limited availability of quality supply.
“India’s warehousing sector is gradually picking up pace with massive growth in 3PL logistics. 3PL players contributed to half of the total warehousing demand during the year so far with an average deal size of 1.1 lakh sq ft. About 75% of the leasing by 3PL logistics was through large deals,” says Vimal Nadar, Senior Director, Colliers India.