According to a recent report by Colliers, industrial and warehouse leasing in India saw a 12% decline in the third quarter of 2023. Between January and September of the same year, the sector recorded 17 million square feet (msf) of leasing across the top five cities in the country. However, this figure was down by 4% compared to the same period the previous year.
During the third quarter of 2023, the leasing activity amounted to 6.2 msf, marking a 12% decrease from the 7 msf leased during the corresponding period in 2022. Pune emerged as the leader in leasing demand for the nine months, claiming a 24% share, closely followed by Mumbai at 23%.
The report also highlighted the dominance of third-party logistics players (3PLs) in the warehousing space, contributing to approximately 40% of the total warehousing demand. The increased activity in Mumbai and Chennai played a significant role in driving this demand.
Furthermore, the leasing by Fast-Moving Consumer Goods (FMCG) companies experienced significant growth, more than doubling, as they expanded their presence in key markets like Delhi-NCR and Pune.
Vimal Nadar, Senior Director & Head of Research at Colliers India, expressed optimism about the leasing momentum continuing into the final quarter of the year, primarily led by 3PL, engineering, and FMCG players. The demand outlook from 3PL players remained positive in the medium-term, suggesting the sector’s continued dominance in warehousing activity for the coming quarters.
Year-to-date (YTD) 2023 saw large deals (more than 100,000 sq ft) account for approximately 72% of the demand. Among these larger deals, 3PL companies continued to hold the majority share, followed by FMCG and automobile players. Mumbai dominated the large-sized deals, with Chennai following closely, across the top five cities, according to the report.
Chennai took the lead in leasing activity during the third quarter of 2023, with a 30% share among the top five cities. Within Chennai, the NH-16 and NH-48 micro-markets witnessed demand primarily from occupiers in the 3PL and engineering sectors, and to a certain extent, the electronics sector.
Vacancy levels in the first half of the year dropped by approximately 100 basis points (bps) to 9.4%. During the third quarter, there was an 86% year-on-year increase in new supply, particularly in Chennai, led by the NH-16 micro-market, as stated in the report.
Also Read: Industrial and Logistics Leasing in India Witnesses 35% YoY Surge: CBRE Report