The Industrial & Logistics sector’s leasing will touch a five-year high in 2023: CBRE

According to real estate firm CBRE's India Market Monitor Q3 2023, leasing in the Industrial and Logistics (I&L) sector is expected to touch a five-year high of 36-38 million square feet (msf) in 2023 across the top eight Indian cities.

Chennai had the largest absorption in the July-September quarter, reaching 2.1 msf. Bangalore and Mumbai came in second and third, respectively, with 1.7 msf and 1.3 msf. These three cities accounted for almost 62% of the total leasing share.

The third-party logistics (3PL) players made up the majority of the sector, accounting for 50% of all leasing activity. Over 8% of electronics and electrical companies and 13% of engineering and manufacturing companies came next.

The regional statistics indicated that domestic firms led the way in leasing activities, accounting for 59% of the market, followed by corporations in the regions of Europe, West Asia, and Africa (25%), and Asia-Pacific (12%). Additionally, the I&L sector had a 12% quarter-on-quarter (QoQ) growth and a 92% year-over-year increase in warehouse completions during the quarter.

From January to September, there was a 13% YoY growth in leasing in the I&L sector. Compared to 24.2 msf in 2022, the overall absorption across the top eight Indian cities was 27.3 msf. During the period, Delhi-NCR, Chennai, and Mumbai accounted for a combined 56% of the leasing activity. With a 45% market share in the first nine months of the year, 3PL companies dominated the leasing sector, followed by engineering and manufacturing (E&M) companies (15%), and auto and ancillary companies (7%).

As per Mr. Anshuman Magazine, Chairman and Chief Executive Officer (CEO)-India, South-East Asia, Middle East, & Africa, CBRE, added, "Moreover, the active participation of larger developers backed by institutional funds, contributing around 40% to the completed projects, underscores the sector's growth potential. In select micro-markets, the prospect of rising rents is bolstered by the premium commanded by new, investment-grade, technologically advanced, and strategically situated assets."

According to CBRE data, supply addition is also anticipated to exceed expectations, reaching 35–37 msf by December as a result of completed projects that were previously delayed. Supply addition was recorded at 28 msf in the first nine months of 2023, indicating a 57% YoY growth.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.