Rise In Industrial And Warehousing Demand to 7.2 Mn Sqft; Vacancy Levels Decline 170 Basis Points, Says Report | SR News Update

Rise In Industrial And Warehousing Demand to 7.2 Mn Sqft; Vacancy Levels Decline 170 Basis Points, Says Report | SR News Update

Industrial and warehousing demand in the top 5 cities witnessed a strong YoY increase of 11% at 7.2 mn sq ft in Q1 2023, standing out as the highest among the last 8 quarters. This growth was driven by 3PL operators who sought to expand in well-known regions, accounting for 41% of total leasing during the period. Read the SURFACES REPORTER (SR) complete report below:

The FMCG sector came in at 12% after experiencing a surge in the uptake of industrial warehousing space, rising by three times the previous year. Major Retail and FMCG companies expanded into populated areas like Delhi-NCR and Mumbai, which corresponded to an increase in private consumption across India.

Delhi-NCR was the top generator of demand during the initial quarter, contributing 29% to total leasing; Mumbai had a 25% share. In Mumbai, YoY growth in leasing was at 37%, due mainly to 3PL operators who broadened their operations despite a weak economic and corporate atmosphere. Tauru Road and NH 48 in Delhi NCR and Bhiwandi in Mumbai were popular among tenants during this period.

Vimal Nadar, Senior Director, and Head of Research, Colliers India said, “3PL operators are targeting larger dense markets with good-quality infrastructure for expansion to ensure quick delivery of online orders. It contributed to more than 2/3rd of the total leasing in Mumbai, led by select large deals. The average deal size by 3PL operators in the city was more than 2 lakh sq feet, 69% higher than the pan India average. 3PL operators will continue to eye larger markets as they look to augment their distribution network.” says 

Industrial and warehousing demand in the first quarter of 2023 stayed strong, pushing down supply by 8% yearly across the top 5 cities.

Developers have been hesitant to move forward with new developments due to climbing raw material prices and increased logistical costs. In coming months, they are likely to be more cautious when sizing up market demand, in order to keep market fundamentals steady. With a dearth of available space and ongoing requirements from 3PL, FMCG & engineering firms, vacancy levels tumbled by 170 basis points YoY to 8.1%. The majority of markets saw single-digit vacancies amplified by this steady activity, besides Delhi-NCR. Anywhere like Chakan in Pune and Bhiwandi in Mumbai registered rental rate increases of 14% and 6%, respectively. 

Q1 2023 saw a huge demand for large deals (>100,000 sq ft) with 3PL companies leading the way. A significant number of these transactions were in Delhi NCR, Mumbai and Pune. The FMCG and Electronics industries experienced the highest growth, with more than 80% of agreements being above average. This surge in activity is due to increasing consumption amongst city-dwelling populations and a growing number of retailers/FMCG players.

Source: Colliers



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