Leasing of industrial, warehousing space up 9% in 5 cities; new supply down 20%

Leasing of industrial and warehousing space rose 9 per cent during January-September to 17.5 million square feet across five cities on better demand, according to Colliers India.

The gross leasing stood at 16 million square feet across five major cities in the year-ago period.

As per the data, the leasing of industrial and warehousing space in Bengaluru rose 2 per cent to 2.3 million square feet in January-September from 2.2 million square feet in the year-ago period.

Chennai saw a 31 per cent decline in leasing to 2.2 million square feet from 3.1 million square feet.

The leasing of industrial and warehousing in Delhi-NCR rose 42 per cent to 6.8 million square feet in January-September from 4.8 million square feet a year ago.

In Mumbai, the leasing went up by 39 per cent to 2.6 million square feet from 1.9 million square feet.

Leasing of industrial and warehousing space in Pune fell 11 per cent to 3.6 million square feet during January-September from 4 million square feet in the corresponding period of the previous year.

Colliers India noted that third-party logistics players (3PLs) remained the top occupiers of warehousing space, contributing to over half of the total demand.

Improved retail market sentiment amid the festive season and higher online spending continue to support warehousing growth and is expected to add to short-term demand addition.

Tauru road and Luhari remained the most active micro-markets in Delhi-NCR, while Chakan-Talegaon continued to attract industrial occupiers in Pune.

"Continued leasing momentum is expected in the warehousing segment with various retail clients in active discussion to consolidate their footprints in large-size mega distribution centres," said

Shyam Arumugam, Managing Director, Industrial & Logistics Services, Colliers India.

The National Logistics Policy is expected to have a great positive impact on the logistics sector in the medium to long term, he added.

"Large deals will continue to drive the warehousing market as e-commerce and 3PL players plan remarkable expansion to enhance efficiency," Arumugam said.

New supply weakened during January-September to 15 million square feet, declining by 20 per cent year-on-year.

Developers remained cost cautious and were waiting for input pricing to reduce further, Colliers India said.

This led to delays in project completion.

In Bengaluru, new supply rose 64 per cent to 1.8 million square feet in January-September from 1.1 million square feet in the year-ago period.

In Pune, new supply increased 87 per cent to 2.7 million square feet from 1.4 million square feet.

However, in Chennai, the supply fell 23 per cent to 2.2 million square feet from 2.9 million square feet.

New supply in Delhi NCR declined 41 per cent to 5.8 million square feet from 9.8 million square feet.

Mumbai witnessed a 27 per cent fall in new supply to 2.5 million square feet during January-September this year from 3.4 million square feet in the corresponding period of the previous year.

Amid moderate supply and robust demand for industrial and warehousing facilities, overall vacancy levels lowered during the quarter.

The consultant expects rents 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 3rd party logistics," said Vimal Nadar, Senior Director, Colliers India.