Industrial & warehouse leasing demand picks up in Q3, stable at 17 mnsqft

These levels are comparable to the same period last year at 17.5 million sq ft. Despite a slow start at the beginning of the year, leasing activity now stands stable at 17 mnsqft and is expected to grow moving into the last quarter of the calendar year.

The report shows that although growth was slower during the first half of 2023, leasing activity increased significantly in Q3CY23, registering a 55 per cent quarter-on-quarter (q-o-q) growth. Pune led the demand during this nine-month period (January-September) with a 24 per cent share, followed closely by Mumbai at 23 per cent. Both cities surpassed Delhi NCR, which is usually the front-runner among major cities in India.In Mumbai, Bhiwandi remained the most active micro-market, while Chakan-Talegaon continued to be the preferred market for industrial occupiers in Pune.

Chennai stood out in Q3CY23, leading leasing activity for the first time with a 30 per cent share among the top five cities…Vijay Ganesh, managing director of industrial & logistics services at Colliers India, stated that FMCG companies alone absorbed 1.5 million sqft of industrial and warehousing space during the first three quarters of 2023, doubling the figures from the same period last year.

“The trend is set to continue owing to support from the government for the manufacturing sector led by initiatives like PLI (Production linked Incentive) and Make in India,” said Ganesh.

In 2023, large deals (over 100,000 sqft) accounted for 72 per cent of the total leasing activity. 3PL companies dominated these large-sized deals, followed by FMCG and automobile players. Mumbai and Chennai were the prominent cities where large-sized deals took place…The leasing momentum is expected to continue in the year’s final quarter, driven by 3PL, engineering, and FMCG players, likely closing in the range of 22-25 million sq ft. Demand outlook from 3PL players remains positive in the medium term, and the sector is anticipated to dominate warehousing activities in the coming quarters.

Developers are also expected to focus more on tech-driven investments, including warehouse management systems, inventory tracking, and fleet management systems, to shape the future of the sector, according to VimalNadar, the senior director & head of research at Colliers India.Nadar also added that institutional players are gaining ground… “Despite global economic headwinds, India’s industrial & warehousing sector remains resilient, closely following the trendline of 2022,” Nadar concluded.