In a promising sign of economic resurgence, India’s industrial and logistics leasing activity has registered a remarkable 35% year-on-year increase, reaching a staggering 19.1 million sq. ft. across eight major cities during the first half of 2023. This significant surge, reported by CBRE South Asia Pvt. Ltd., underscores the resilience and vitality of the sector in the face of evolving market dynamics.
Leading this surge was the dynamic trio of Delhi-NCR, Mumbai, and Chennai, which collectively contributed 60% of the total leasing activities between January and June. The report reveals that except for Bengaluru, all cities demonstrated a substantial upswing in industrial and logistics leasing in comparison to the same period last year.
The industrial and logistics sector has not only witnessed an impressive leasing upturn but has also seen a noteworthy growth on the supply side. With a remarkable 78% year-on-year increase, the supply side recorded a total of 17.7 million sq. ft. during the first half of 2023. This robust growth can be attributed to the release of pent-up supply in select cities.
Key cities contributing significantly to this surge in supply included Chennai, Kolkata, and Mumbai, collectively accounting for more than half of the total project completions. This surge was bolstered by major developers, backed by institutional funds, who played a pivotal role, contributing approximately 39% to the overall supply during this period.
Unveiling a prominent trend, the report highlighted the substantial presence of third-party logistics (3PL) players in the leasing activity, commanding a remarkable 43% share in H1 2023. E-commerce, retail, and manufacturing entities are increasingly outsourcing their supply chain processes to 3PL firms, harnessing storage optimization, enhanced flexibility, and operational cost curtailment.
The e-commerce and retail sectors individually accounted for a 9% share each in leasing activity. Moreover, auto & ancillary (7%), FMCG (6%), and electronics and electricals (5%) sectors have collectively enriched the leasing landscape, further diversifying the industry.
A closer examination of the market’s leasing landscape reveals a preference for smaller-sized transactions (<50,000 sq. ft.), constituting 44% of the leasing activities in H1 2023. Medium-sized transactions (50,000 – 100,000 sq. ft.) and large-sized deals (over 100,000 sq. ft.) constituted about 24% and 32% of the activity, respectively.
Delhi-NCR, Mumbai, and Chennai emerged as key players in closing large-sized deals, collectively accounting for a commendable 65% of such transactions. Driven primarily by 3PL players, followed by engineering & manufacturing and retail firms, these deals have collectively contributed to around 70% of large-sized deal closures.
Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, aptly encapsulated the sector’s trajectory, stating, “The second half of the year foresees a consistent influx of leasing activities, paving the way for an estimated 32-36 million sq. ft. uptake of Industrial and Logistics (I&L) space in 2023.”
As the industrial and logistics sector continues to evolve, it finds itself at the nexus of increased 3PL engagement, strategic supply chain optimization, and burgeoning consumer demand across diverse sectors. This upward trajectory is set to reshape India’s real estate landscape and further amplify the nation’s economic prowess.