Industrial and warehousing demand stable in India for the first half of 2023, reports Colliers

As per the latest report of Colliers, around 11 million square feet of space has been leased by the industrial and warehousing sector in 2023 across the top five cities. The demand has been stable when compared to the same period last year.

According to the report, Delhi NCR continued to lead demand with a 25% share, closely followed by Mumbai at 24.6%. Even though most of the cities saw a single-digit change in demand, Mumbai witnessed a remarkable 28% year-on-year increase in leasing, the reason being the expansion from players in the third-party logistics (3PL) sector.

Despite the global economic meltdown, the industrial and warehousing sector is witnessing steady growth backed by the govt. policies, increasing capital investments, and manufacturing output. The reliable trend in leasing was primarily steered by 3PL operators, accounting for 37% of total leasing, followed by FMCG and engineering firms, with 12% and 11%, respectively. It is expected that the demand will be dominated by 3PL players, but there will be steady momentum in leasing from other segments as well. Amid steady demand for quality Grade-A warehousing spaces, vacancy levels during the first half of the year dropped by 110 basis points (bps) to 10% as the period saw the fresh supply of 10.7 mn sq ft, a 10% dip YoY, as developers were watchful on the evolving demand scenario. In the 6 months, the second quarter witnessed changes in demand with four million square feet of leasing and Pune topped the chart with a 26% share.

The report also mentioned that during 2023, large deals accounted for about 75% of the demand. 3PL companies accounted for the highest share of such deals, followed by FMCG and engineering players with Mumbai and Pune topping the chart among the top five cities.