Logistics leasing activity up 30% in 2019, 19 mn sqft space added

Logistics leasing activity increased 30 per cent in 2019 to touch 33 million sqft, mainly driven by policy announcements made by the government which boosted e-commerce and retail sectors, CBRE said.

Industrial and logistics sector witnessed investments of more than $200 million in 2019, a study conducted by CBRE titled 'India Industrial and Logistics Market View, H2 2019' said.

The government aims to enact several structural reforms to improve physical connectivity, CBRE Chairman and CEO India, South East Asia, Middle East and Africa Anshuman Magazine said.

"Further, the implementation of government initiatives such as the National Logistics Policy and the national e-commerce policy as well as large-scale infrastructure development are expected to promote investment, thereby further improving the overall stock of warehousing space in India," Magazine added.

He further said the fundamentals of the sector are strengthening, backed by the recovery of domestic demand, improvement of manufacturing sector and structural shift towards omnichannel retailing.

The report stated that Bengaluru, NCR (National Capital Region) and Mumbai accounted for about 60 per cent of the overall space take up during the year.

While third-party logistics (3PL) firms accounted for about half of the leasing activity in 2019, an increase from 36 per cent in 2018, it was followed by e-commerce players with a share of about 18 per cent.

On the supply side, nearly 19 million sqft of space was added in 2019, which is 78 per cent higher compared to 2018. About 70 per cent of this supply was reported in NCR, Mumbai and Chennai.

"Leasing is expected to continue to be driven by 3PL firms and e-commerce players, along with retail corporates. However, 3PL occupiers are expected to turn more cautious about expanding their footprint due to tightening profit margins," the report said.