Backed by sharp growth in demand for warehousing in the e-commerce segment and strong production growth, the year 2021 saw leasing of nearly 22 million square feet in industrial facilities and warehousing in the top five cities across the country. According to a report by real estate services firm Colliers, high-quality warehousing space was sought after by 3PL (third-party logistics) players with 33 per cent share, followed by e-commerce companies with 29 per cent share. total lease.
Geographically, demand for industrial and warehousing space was led by Delhi-NCR with a market share of 29 per cent, followed by Pune and Mumbai with a share of 21 per cent and 20 per cent, respectively. With NH8 emerging as the preferred cluster, Delhi-NCR leased a total of 6.5 million sq ft of such spaces in 2021.
The report shows that despite the impact of the COVID-19 pandemic, the leasing market witnessed strong momentum. Apart from increasing demand for industrial locations in cities like Chennai, Pune and Delhi NCR, the need for last-mile delivery for customers has also registered active leasing inquiries in emerging Tier II markets.
Shyam Arumugam, Managing Director, Industrial & Logistics Services, Colliers India, said, “Initiation of supply in most markets is seeing a strong revival despite rising material prices as a challenge. With Grade A absorption e-commerce and 3PL areas in major cities once again dominate the space at 22 million sq ft.”
Arumugan said the government is pushing for adoption of clean mobility, and with the successful rollout of PLI schemes in key manufacturing sectors, this pace of move is likely to drive greater demand for space.
In 2021, the overall Grade A industrial and warehousing supply grew 8 per cent to 24 million sq ft due to higher building construction in Delhi-NCR and Chennai. Pan-India Grade A vacancy fell in six months, from 12.2 per cent in June 2021 to 11.5 per cent. This was due to lower-than-expected new supplies and stronger leasing in Grade A properties.
“The occupants are preferring Grade A properties which have good height and compliance. Around 66 per cent of the total leasing was seen in Grade A industrial and warehousing facilities indicating an increasing inclination for higher grade structures. Vimal Nadar, Senior Director, Research, Colliers India said, In-city warehousing, the demand for smaller fulfillment centers is high in top metro cities as the delivery timelines are reduced from single day delivery to a few minutes delivery .
E-commerce companies leased 6.6 million square feet of warehousing space during 2021, accounting for 29 percent. The share was led by the larger locations that e-commerce companies typically take for their fulfillment centers.
Interestingly, around 14 per cent of such space off-take demand was from pure-play kirana/food retail companies, leading to higher demand for online grocery across the country. With a focus on 30-minute delivery in major cities, such companies are shifting to in-city warehousing – closer to demand hubs.
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