Industrial and Logistics sector leasing probably to slow down to 32-35 million square feet (msf) in 2023

The global real estate consultant’s ‘2023 India Market Outlook’ report said that the industrial and logistics ( I&L) supply forecast is expected to exceed 2022 levels and touch 24-26 mn sq ft in 2023

CBRE South Asia in its report, ‘2023 India Market Outlook’ says, the growth rate could slow as occupiers will align their portfolio strategies with global headwinds. This would result in absorption ranging between 32-35 mn. sq. ft., a 1-5% Y-o-Y growth in 2023. The report highlights key trends and projections for the Indian real estate sector this year.

The demand is expected to be predominantly driven by 3PL and engineering & manufacturing occupiers. The report points to anticipated heightened interest from FMCG, retail and electronics & electrical firms. Moreover, the share of large-sized deals ranging from 32-35% is expected in 2023.

Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said, “We believe  strong macroeconomic fundamentals and domestic consumption will overcome the impact of an impending slowdown….The I&L sector occupiers are likely to move towards achieving operational efficiencies and rationalise cost in a multi-user facility, and this is expected to push the take-up of large-sized spaces hereon. Omnichannel retail, along with need for urban fulfilment centres would drive leasing by retail and FMCG firms”.

Supply chain diversification to impact leasing activity: There would be a continued focus on ‘just-in-case’ buffer stocks to drive warehousing activity. Demand centers would see more robust leasing as several occupiers prefer to locate their warehouses closer to consumption hubs to reduce transportation costs.

Need for speedy deliveries to heighten in-city warehousing demand: Focus on faster deliveries and moving close to end-users have increased the need for smaller I&L spaces within the city. This trend is expected to fuel growth of multi-level warehouses in the suburbs of tier – I locations, which would help solve the Urban logistics (last mile logistics) puzzle.

Knight Frank India observes that 11.3 million square feet (msf) of office space was transacted in January-March 2023 (January – March). Bengaluru remained the foremost market with a total leasing of 3.5 msf of office space, followed by NCR which recorded 2.6 msf and Mumbai at 2.2 msf of gross leasing in the first three months of the calendar year 2023. The three largest markets accounted for 73% of the area transacted and saw positive growth in YoY terms.