Logistics Rent in Delhi-NCR Sees 4% Yearly Increase in First Half of 2023

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    The average monthly rent for warehousing and logistics spaces in and around the national capital region increased by 4% annually to Rs. 22.5 per square foot in the initial six months of this year due to higher demand, according to real estate consultant Vestian. Leasing of warehousing and logistics space in Delhi-NCR grew by 68% to 4.7 million square feet in the January-June period this year, up from 2.8 million square feet in the same period last year.

    “The Indian warehousing and logistics sector is navigating global challenges with strong and sustainable fundamentals. Several major infrastructure projects are planned across the country to enhance connectivity and reduce transit time,” noted Vestian’s Chief Executive Officer, Shrinivas Rao.

    In a report released on Wednesday, Vestian stated that among seven major cities, the micro-markets of Delhi-NCR reported the highest weighted average rentals of Rs. 22.5 per square foot per month, compared to Rs. 21.6 in the previous year. Bengaluru closely followed at Rs. 22 per square foot per month, underscoring the city’s significance in the logistics sector. Rental rates in Bengaluru remained steady. In Pune as well, the monthly weighted average rentals remained unchanged at Rs. 20.9 per square foot, compared to Rs. 20.8 in the first six months of the prior year. Hyderabad’s monthly rent stood at Rs. 20.5 per square foot, a slight increase from Rs. 20.4 in the corresponding period of the previous year. In Chennai, the monthly rent experienced a slight decrease to Rs. 19.9 per square foot from Rs. 20.

    Monthly rent in Mumbai grew by 2% to Rs. 19.7 per square foot from Rs. 19.3. In Kolkata, rent remained stable at Rs. 18.2 per square foot per month during the January-June period of this year.

    Vestian’s report indicated a 17% overall increase in leasing and absorption of warehousing and logistics space across the seven major cities, totaling 15.4 million square feet during January-June 2023, compared to 13.2 million square feet in the same period of the previous year. Third Party Logistics (3PL) companies remained the primary demand driver during the first half of 2023, contributing 26% of the total demand share. Engineering and manufacturing companies, as well as FMCG companies, accounted for 16% and 11% of the shares, respectively.

    Among these cities, Delhi-NCR contributed 31% to the total leasing/absorption during the first half of 2023, marking an increase from 21% the previous year. This signifies robust demand for warehousing and logistics facilities in the vicinity of Delhi, Noida, and Gurugram, pivotal commercial and industrial hubs, according to Vestian.

    Mumbai observed a substantial 75% increase in leasing for warehousing and logistics space, reaching 3.8 million square feet from 2.2 million square feet. Pune reported a marginal increment, reaching 2.6 million square feet from 2.5 million square feet.

    However, Bengaluru witnessed a slight dip in leasing activity, with figures dropping to 1.7 million square feet from 1.8 million square feet. Hyderabad also experienced a decline, with leasing activity decreasing from 1.4 million square feet to 1.3 million square feet.

    Chennai displayed a significant 67% drop in leasing activity for warehousing and logistics space, recording 0.5 million square feet during January-June 2023, compared to 1.5 million square feet in the previous year’s corresponding period. Kolkata also witnessed a 23% decline in demand, with figures decreasing from 1 million square feet to 0.8 million square feet in the review period.

    Vestian, headquartered in Chicago, maintains offices across the United States, India, China, the United Kingdom, Sri Lanka, and the Middle East.

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