Industrial and Logistics Leasing in India Witnesses 35% YoY Surge: CBRE Report

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    In a testament to the resilience of India’s Industrial and Logistics (I&L) sector, CBRE South Asia’s latest report reveals a remarkable 35% year-on-year increase in leasing activities during the first half of 2023. The sector, known for its adaptability to evolving market dynamics, has emerged as a key player in the Indian real estate landscape.

    Leasing Activities Soar

    The initial six months of 2023 witnessed an impressive surge in leasing activities, with a total of 19.1 million square feet leased across eight major cities in India. Leading the way in this surge were Delhi-NCR, Mumbai, and Chennai, each contributing significantly to the sector’s overall leasing figures.

    Pent-up Supply Completion Drives Growth

    Driving the sector’s growth further is the completion of pent-up supply, resulting in a remarkable 78% year-on-year increase in supply, totaling 17.7 million square feet. Key cities such as Chennai, Kolkata, and Mumbai played pivotal roles in this supply surge, underlining their strategic importance in the logistics landscape.

    Role of Institutional Funding and Large Developers

    An integral factor in this surge has been the involvement of large developers with access to institutional funds. Notably, these players contributed to 39% of the supply surge, showcasing their commitment to sustainable development within the I&L sector.

    Dominance of 3PL Players in Leasing

    Driving the leasing momentum with authority, third-party logistics (3PL) players accounted for a significant 43% of the leasing activities. This achievement can be attributed to their symbiotic relationships with various industries, including e-commerce, retail, and manufacturing.

    While most cities experienced an upward trajectory in rentals, both Mumbai and Kolkata displayed a marginal dip of 2-3%, introducing subtle variations into the rental landscape. This equilibrium and adaptability of the sector to diverse market conditions are noteworthy.

    Optimistic Projections for the Future

    CBRE South Asia’s projections for the remainder of 2023 are optimistic, anticipating an I&L sector uptake ranging from 32-36 million square feet. This growth is expected to be driven by the consistent contributions of 3PL players and engineering firms. On the supply side, an influx of 26-30 million square feet is expected by the end of the year, primarily led by larger developers and institutional funds.

    Tier-II Cities: A Focal Point for Investment

    The report also sheds light on an emerging trend – increased investment in tier-II cities as logistics growth hubs. This strategic expansion highlights the sector’s quest for diversification and points towards promising opportunities beyond traditional metro centers.

    India’s I&L sector is riding the wave of substantial growth, underpinned by surges in leasing, supply dynamics, and a collaborative ecosystem of stakeholders. CBRE South Asia’s comprehensive analysis not only provides insights into the sector’s current state but also charts a course for its promising future. As the sector continues to evolve, its adaptive, collaborative, and innovative spirit will inevitably shape its narrative in the years ahead.

    Also read: How India Will Emerge As Most Preferred Logistics, Warehouse Destination Globally?

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