BM Property: Industrial & logistics market: Leasing activity is high

Coldwell Banker Richard Ellis (CBRE) recently released its report, India Market Monitor Q3 2024 – Industrial & Logistics, highlighting that the leasing activity in India’s Industrial & Logistics (I&L) sector rose by 48% quarter-on-quarter in the July-September period of 2024. Across the top eight cities (Delhi-NCR, Bengaluru, Mumbai, Hyderabad, Chennai, Pune, Kolkata, and Ahmedabad), total absorption reached 11.4 million sq. ft., up from 7.7 million sq. ft. in the previous quarter. Delhi-NCR, Kolkata, and Hyderabad together represented 65% of leasing activity during this period, with the total supply standing at 9.6 million sq. ft.

In Bengaluru, leasing activity reached 1.5 million sq. ft. in Q3 2024, contributing significantly to the national total. Across India, third-party logistics (3PL) companies dominated the sector, accounting for 38% of leasing activity, followed by engineering and manufacturing at 19%, retail at 17%, e-commerce at 10%, and fast-moving consumer goods (FMCG) at 6%.

Domestic corporations led in leasing activities with an 82% share, a rise from 67% in Q3 2023, followed by APAC corporations at 9% and EMEA corporations at 6%. The quarter also saw a slight moderation in warehouse completions.

Notably, the report shows that between January and September 2024, the cumulative I&L absorption across the top eight cities reached 27.5 million sq. ft., with Delhi-NCR, Kolkata, and Bengaluru collectively accounting for 61% of leasing activity, totaling 16.9 million sq. ft. Chennai, Bengaluru, and Delhi-NCR collectively housed 50% of new supply, establishing their positions as primary hubs in the I&L sector.

Looking ahead, cities such as Chandigarh, Hosur, Jaipur, Lucknow, and Vizag are expected to become key areas for warehousing expansion as companies expand their distribution networks in Tier-II and Tier-III cities, aiming to reach larger populations and optimise operational costs.

Anshuman Magazine, chairman & CEO for India, Southeast Asia, Middle East & Africa at CBRE, noted that leasing in the I&L sector saw quarterly growth in Q3 2024. Although supply moderated, it is expected to pick up with the launch of several high-profile projects backed by institutional investors. Ram Chandnani, Managing Director, Advisory & Transaction Services, India, added that 3PL firms are likely to continue dominating the logistics space, as companies increasingly outsource storage and delivery to reduce lead times and optimise costs. Developers are also anticipated to prioritise sustainable facilities, as occupiers are committed to reducing their carbon footprint and meeting ESG objectives by expanding their networks across Tier-II and III cities.