Strong demand drives industrial and warehousing real estate in 2022: Report
Oct 18, 2022
New Delhi [India], October 18 : Demand for industrial and warehousing-related real estate witnessed a 9 per cent rise on a year-on-year basis with a total gross absorption of 17.5 million square feet across top cities in India, said Nasdaq-listed diversified professional services and investment management company, Colliers.
Demand remained resilient during the third quarter of 2022 at 6.7 mn sq ft, the highest since the first quarter of 2021, it said in a statement on Tuesday.
"Third-party logistics players remain by far the top occupiers of warehousing space, contributing to over half of the total warehousing demand to date. Improved retail market sentiment amidst the festive season and higher online spending continues to support warehousing growth and is expected to add to short-term demand addition," it said.
Delhi NCR region, the statement said, led the demand during 2022 with 39 per cent of the total share, followed by Pune at 21 per cent share in total leasing backed by robust demand from third-party logistics 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, it added.
"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. As far as the macro environment, the unveiling of the National Logistics Policy by the honourable 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," said Shyam Arumugam, Managing Director, Industrial and Logistics Services, Colliers India.
"Large deals will continue to drive the warehousing market as e-commerce and third-party logistics players plan remarkable expansion to enhance efficiency," Arumugam said.
Meanwhile, it said new supply weakened during 2022 at 15 mn sq ft, declining by 20 per cent YoY as developers seemed to have remained cost cautious in waiting for input pricing to reduce further. This, it said, may lead to delay in project completion.
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 with massive growth in third-party logistics. 3PL players contributed to half of the total warehousing demand during 2022 with an average deal size of 1.1 lakh sq ft. About 75 per cent of the leasing by third-party logistics was through large-sized deals" said Vimal Nadar, Senior Director, Colliers India.
