With about 13 million sq ft of leasing activity taking place in H1 2024 – a17 per cent y-o-y growth – industrial & warehousing demand across the top five cities remained healthy, says a Colliers India report. Chennai and Delhi NCR led the demand, cumulatively accounting for about half of the overall leasing in H1 2024. Third Party Logistics (3PL) players continued to be the top occupiers in the warehousing space, contributing to about 36 per cent share in the overall demand during the first half of the year. Interestingly, demand in Chennai almost doubled in H1 2024, over what was recorded in the corresponding period last year and was largely driven by warehousing requirements of 3PL players. At a micro-market level, warehousing space uptake was more than 1.5 million sq ft each in Bhiwandi (Mumbai), Chakan-Talegaon (Pune) and Oragadam (Chennai).
“On a quarterly basis, Q2 2024 saw about 6 million sq ft of industrial & warehousing demand across the top five cities – a 48 per cent rise y-o-y,” informs Vijay Ganesh, managing director, industrial & logistics services, Colliers India. “With 1.8 million sq ft of leasing and 30 per cent share, quarterly demand was significantly driven by Delhi NCR. The demand in the region was led by large uptake of industrial and warehousing space in Farukhnagar and Sonipat micro markets. Taking cognisance of healthy demand across major cities and supportive government policies, developers have been infusing high quality warehousing facilities, replete with technologically advanced features. With significant completions in the first half of the year, 2024 is likely to witness Grade A supply infusion to the tune of 20-25 million sq ft”.
3PL demand has remained steady in H1 2024, even as leasing by other segments has also seen a rise. While 3PL players continued to dominate the demand with about 36 per cent share, space uptake by players from engineering, FMCG and electronics segments was significant with 12-16 per cent share each. Interestingly, both engineering and electronics segments witnessed over 1.7 times leasing activity in H1 2024, compared to the corresponding six-month period of 2023. Going ahead, driven by industry-specific policies conducive to business and an enabling regulatory framework, diverse segments are likely to propel the industrial and warehousing space demand in India.
Upward trend
“With strong macro-economic indicators, India’s industrial and warehousing market continues to grow and the momentum is likely to continue in the second half of the year,” says Vimal Nadar, senior director & head, research, Colliers India. “An upward trend in indicators such as manufacturing PMI and IIP reflects healthy industrial activity, which is likely to spur demand for industrial and warehousing spaces. Interestingly, the manufacturing PMI has been in expansionary zone since July 2021 and remained close to 60 in the last few months. Furthermore, recent budgetary announcements will improve logistics efficiencies, catalyse demand and attract investments in the industrial and warehousing sector. Additionally, increasing platform level investments will lead to influx of superior quality industrial and warehousing space in the next few years.”
With supply infusion exceeding the demand for Grade A warehousing spaces, overall India vacancy levels increased by 210 basis points (bps) on an annual basis and stood at 12.2 per cent at the end of H1 2024. Developer anticipation of heightened demand in upcoming quarters, have resulted in fresh supply of 14.4 million sq ft in H1 2024 – a 35 per cent y-o-y rise. With about 5.7 million sq ft of new industrial and warehousing developments, Delhi NCR accounted for about 40 per cent share in overall completions in first half of the year. Notably, Q2 2024 witnessed about 7.5 million sq ft of completions in top five cities of the country – a 53 per cent y-o-y rise. Q2 2024 also marked the highest quarterly supply infusion in the last two years. Amidst healthy demand and high-quality supply infusion, rentals in key micro markets saw an appreciable uptick.
During H1 2024, large deals (>200,000 sq ft) accounted for about 35 per cent of the demand. Although a vast majority of these larger deals came from 3PL players, electronics and FMCG occupiers too had large warehousing space requirements. On a city level, Chennai followed by Delhi NCR dominated the chunk of large-sized deals, says the Colliers India report.