Gross leasing of warehousing space in 5 cities up 11% in Jan-Mar

Gross leasing of industrial and warehousing space rose 11 per cent across five major cities to 6.2 million square feet during January-March period, according to real estate consultant Colliers India.

"Activity in Grade A industrial and warehousing facilities continues to be robust during Q1 2022 with gross absorption in the top 5 cities at 6.2 million square feet, an 11 per cent increase from Q1 2021. The demand was led by heightened leasing in Delhi-NCR and Mumbai," the company said in a statement on Wednesday.

Overall, the demand was steered by robust warehousing demand from third-party logistics players, amidst strong consumer demand across sectors.

About 50 per cent of the gross absorption was led by third-party logistics players, followed by the engineering and automobile sectors with a share of 17 per cent and 12 per cent, respectively.

As per the data, the gross leasing of industrial and warehousing space fell in Bengaluru to 0.9 million square feet in January-March 2022 from 1.5 million square feet in the year-ago period. Chennai also saw fall in leasing to 0.7 million square feet from 0.8 million square feet.

Pune too witnessed a fall in leasing activities to 1.6 million square feet from 1.8 million square feet.

In Delhi-NCR, the leasing grew to 1.7 million square feet from 1.2 million square feet, while in Mumbai the leasing rose to 1.3 million square feet during January-March 2022 from 0.3 million square feet in the corresponding period of the previous year.

"Demand for Grade A spaces remained robust with healthy take-up witnessed this quarter across key cities with NCR market leading the space take-up. Growing concerns about rising construction costs have exerted upward pressure on rents quoted for upcoming developments across markets," said Shyam Arumugam, Managing Director, Industrial and Logistics Services, Colliers India.

The developers are now looking to cater to build-to-suit demand keenly as opposed to speculative supply addition traditionally due to this increased input cost scenario, he said.

"The trend is expected to continue in the next few quarters as logistics and e-commerce players take up larger spaces in top cities as they scale up their operations in Tier-I cities," Arumugam said.