Based on the performance so far, it is likely that 3PL players will lead the industrial and logistics leasing activity as retail, e-commerce and manufacturing players continue to progressively outsource their inventory and delivery capabilities to optimize costs and minimize lead time.
The engineering & manufacturing firms are also expected to drive sizable leasing, backed by the government’s concerted efforts to bolster domestic manufacturing.
During January-June period, industrial & logistics leasing across top eight cities saw a moderation, totalling 16.6 million sq ft. Despite this, a rebound in space absorption is expected in the second half of the year, driven by new market entrants, increased inquiries, high-quality supply, and the finalization of pending deals in sectors like 3PL, retail, and FMCG.
“The Indian industrial and logistics sector is poised for a period of sustained growth, with promising indicators emerging for the latter half of 2024. While the first half witnessed a shift towards smaller transactions, the market's underlying fundamentals remain robust. We anticipate a resurgence in leasing activity driven by a combination of factors, including increased demand from diverse sectors, the entry of new market players, and the availability of high-quality supply,” said Anshuman Magazine, Chairman & CEO, India, Southeast Asia, Middle East & Africa, CBRE.
These positive developments, according to hum, collectively contribute to an optimistic outlook for the I&L sector.
“The industrial & logistics sector is on an upward trajectory and this momentum will gain further acceleration on the back of a resilient economy and proactive policy imperatives. The government’s initiative to build a robust manufacturing ecosystem, driven by the Production Linked Incentive (PLI) scheme will not only nurture domestic occupier interest but will also boost the sentiments of institutional investors,” said Ram Chandnani, MD, Advisory & Transaction Services, CBRE India.
He is of the view that the increasing focus on ESG and sustainable facilities will drive demands from occupiers across industries.
Supply additions decreased by 16% to 15.5 million. sq ft during this period, with Chennai, Bengaluru, and Mumbai contributing 57% of the total supply. Larger developers, backed by institutional investors, accounted for about 33% of this supply, with Chennai, Delhi-NCR, and Pune leading such project completions.
The share of FMCG and E-commerce players in total space takeup stood at approximately 10% and 9%, respectively. However, these shares are likely to increase in the second half of the year on account of the festive season-linked surge in sales. Other sectors that drove industrial & logistics leasing include retail at 7% and electronics & electricals at 6%.
Bengaluru, Delhi-NCR and Kolkata dominated the leasing activity, cumulatively accounting for almost 58% of the overall space take-up in the first half of 2024. Additionally, these three cities registered an expansion in space absorption compared to the corresponding period of the previous year.
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