Delhi NCR and Chennai with over 5 mn sq ft of leasing each, drove demand during Jan-Sept 2024. 3PL segment accounted for 35% of Grade A space uptake in 2024, followed by Engineering and FMCG segments. At about 22 mn sq ft, supply rose 29% YoY in the first three quarters of 2024.
During January to September 2024, industrial and warehousing demand witnessed 20.2 mn sq ft of leasing, registering a 17% annual growth, across the top five cities in India. Interestingly, quarterly average space uptake has steadily increased from 5.7 mn sq ft in 2021 to 6.7 mn sq ft in 2024, indicating steady and sturdy growth in industrial and warehousing demand.
During the first three quarters of the year, Delhi NCR and Chennai cumulatively accounted for 53% share in the overall leasing. While Third Party Logistics (3PL) players continued to dominate the overall demand, contributing to 35% share in overall leasing, demand from Engineering and FMCG segments was significant. At a micro market level, Bhiwandi in Mumbai has witnessed 3.7 mn sq ft of leasing activity in 2024, followed by Oragadam in Chennai and Chakan-Talegaon in Pune. Both have seen more than 2.0 mn sq ft of demand and continue to drive warehousing demand in respective cities.
“On a quarterly basis, Q3 2024 saw about 7.3 mn sq ft of industrial & warehousing demand across the top five cities, an 18% rise YoY. With 2.3 mn sq ft of leasing and about one-third share, Delhi NCR continued to drive quarterly demand. The demand in the region was led by large uptake of industrial and warehousing space in Bhaproda and Kulana micro markets. Across the top five cities, 3PL firms accounted for the bulk of quarterly demand led by Mumbai and Chennai. Notably, engineering firms accounted for about 26% share in overall demand during the third quarter, with large take up of space in Chennai and Delhi NCR. Moreover, with increased demand for quality Grade A spaces replete with sustainable and technologically advanced features, leasing momentum by such firms is likely to continue over the next few years” says Vijay Ganesh, Managing Director, Industrial & Logistics Services, Colliers India.
3PL players continue to dominate demand, however leasing continues to diversify
While 3PL players continued to dominate the demand during Jan-Sept 2024, at about 35% share in overall leasing, space uptake by players from Engineering and FMCG segments was significant. The sectors together accounted for 32% of industrial and warehousing demand in 2024. Additionally, industrial and warehousing space uptake by these segments are expected to remain upbeat with the upcoming festive season. Moreover, the rise of Q-commerce players is likely to catalyze demand for bigger hub-warehouses, across major urban centers. Interestingly, the electronics segment continued to witness heightened traction, with 2X times leasing in the first three quarters of 2024, compared to the corresponding period in 2023.
“Taking cognizance of healthy demand across major cities and supportive government policies, 2024 can potentially close with record leasing activity to the tune of 25-30 mn sq ft. Improving logistics efficiencies, capacity augmentation and enhanced credibility of India as a global manufacturing hub will keep the growth momentum steady in the industrial and warehousing sector.” says Vimal Nadar, Senior Director & Head of Research, Colliers India.
Led by healthy leasing activity and improved developer confidence, the Jan-Sept 2024 period saw supply infusion of 21.6 mn sq ft, a 29% rise YoY. With about 7.6 mn sq ft of new industrial and warehousing developments, Delhi NCR alone accounted for about 35% share in overall completions during the nine-month period. Even on a quarterly basis, new supply remained healthy in Q3 2024, with about 7.2 mn sq ft of completions across top five cities of the country. Amidst favorable demand-supply dynamics, overall vacancy levels at the end of Q3 2024 remained stable at around 12-13%.
Large sized deals account for about 40% of the total leasing
During the first nine months of 2024, large deals (>200,000 sq ft) accounted for about 40% of the overall demand. Although a vast majority of these larger deals came from 3PL players, Engineering and FMCG segments also saw considerable large-sized deals. At the city level, industrial and warehousing space uptake in Delhi NCR was also driven by large sized deals, a marked deviation from 2023, wherein leasing activity was dominated by small sized deals. Almost 50% of the deals in the first nine months of 2024 were large sized in Delhi NCR.
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