The industrial and logistics (I&L) sector across the top eight cities is expected to record a five-year high in absorption of real estate space, at 36–38 million sq ft, by the end of 2023, according to commercial real estate services provider CBRE.
Leasing in the I&L sector grew 13 per year-over-year during the January to September 2023 period. Total absorption across the top eight cities stood at 27.3 million sq ft, compared to 24.2 million sq ft a year ago. Mumbai, Chennai, and Delhi-NCR collectively accounted for 56 per cent of the leasing activity.
During this period, third-party logistics players dominated leasing with a 45 per cent share, followed by engineering and manufacturing companies (15 per cent), auto and ancillary (7 per cent), FMCG (6 per cent), and electronics and electrical (5 per cent).
Meanwhile, supply addition, at 28 million sq ft, recorded a 57 per cent y-o-y increase. Delhi-NCR, Chennai, and Kolkata collectively contributed 56 per cent of the supply addition.
Further, the report states that supply, too, is expected to outperform previous years, reaching 35–37 million sq ft by year-end, driven by the completion of pending projects.
Anshuman Magazine, Chairman and CEO, CBRE (India, South-East Asia, Middle East and Africa), said, “With the surge in quality supply additions, robust festive demand, and the completion of pent-up projects, we anticipate the overall absorption to touch a five-year high.
Moreover, the active participation of larger developers, backed by institutional funds, contributing around 40 per cent to the completed projects, underscores the sector’s growth potential, he said. In select micro-markets, the prospect of rising rents is bolstered by the premium commanded by new, investment-grade, technologically advanced, and strategically situated assets, he added.