Industrial and warehousing space leasing saw a 23% annual increase in January-March this year, reaching 135 lakh square feet across 19 major cities in India. This surge was driven by demand from third-party logistics companies and manufacturers, as reported by Savills India.
The year kicked off with robust absorption, with 13.5 million (135 lakh) square feet leased in January-March 2024, compared to 11 million (110 lakh) square feet in the same period last year.
Of the total absorption, 78% was in tier I cities, with the remaining 22% in tier II and III cities. Tier I cities, including Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, Delhi-NCR, and Pune, saw a 25% increase in leasing, while tier II and III cities, such as Guwahati, Bhubaneshwar, Patna, and others, witnessed a 20% growth.
Delhi-NCR led in absorption, contributing 21% in January-March 2024, followed by Pune and Bengaluru at 12% each. The contribution of Pune increased from 7% in Q1 2023 to 12% in Q1 2024, while it decreased for Mumbai from 14% to 7%.
Srinivas N, Managing Director of Industrial and Logistics at Savills India, attributed the trend to the growing supply chain outsourcing, leading to increased expansion of third-party logistics players in tier II and III cities. He also highlighted the manufacturing sector’s significant role, accounting for over 25% of total absorption.
Additionally, the e-commerce sector is expected to drive further activity, especially in urban distribution and extending reach to tier II and III cities, making them key hubs for sourcing, consumption, and distribution.
| Metric | January-March 2024 (in lakh square feet) | Year-on-Year Growth (%) |
|---|---|---|
| Total Leased Space | 135 | 23 |
| Tier I Cities Leased Space | 105 | 25 |
| Tier II and III Cities Leased Space | 30 | 20 |
| Top Contributing Cities (% of Total) | ||
| Delhi-NCR | 28.35 | |
| Pune | 16.2 | |
| Bengaluru | 16.2 | |
| Mumbai | 9.45 |
Also read: Insights on India’s Commercial Real Estate Landscape