Industrial & warehousing leasing up 9% YoY on strong demand: Colliers study

Industrial & warehousing demand grew 9 per cent year on year in the first nine months of Calendar 2022 and total gross absorption stood at 17.5 million square ft (mn sq ft) across the top five cities in India. However, in the third quarter, gross absorption was highest in the last eight quarters, at 6.7 million sq feet, led by third-party logistics operators. Demand remained resilient during the third quarter and stood at 6.7 million sq ft, the highest since the first quarter (Q1) of 2021, a Colliers report said.

Third-party logistics players (3PLs) remained the top occupiers of warehousing space, contributing to over half of the total warehousing demand. Improved retail market sentiment amid the festival season and higher online spending were the key drivers of warehousing growth and are expected to boost short-term demand too.

According to the report, Delhi-NCR and Pune together accounted for about 70 per cent of the leasing and 60 per cent of total supply. Delhi-NCR led the demand during the first nine months of 2022 with a 39 per cent share, followed by Pune at 21 per cent share backed by robust demand from 3PL, Engineering & E-commerce players.

New supply declined by 20 per cent YoY as developers remained cautious about costs and waited for input prices to reduce further. This led to delay in project completions. Amid moderate supply and robust demand for industrial and warehousing facilities, overall vacancy levels dipped by 0.7 per cent during the quarter. Rents are likely to firm up in the next few quarters across preferred micro markets in key cities owing to strong demand and limited availability of quality supply.