Industrial and Warehousing Demand in India Sees 17% Growth

From January to September 2024, demand for industrial and warehousing spaces in India's top five cities grew by 17%, driven largely by the engineering and FMCG sectors. This demand shift was supported by a robust supply increase, especially in Delhi NCR, where leasing has been significant.

Economic activity has fueled a 17% annual growth in demand for industrial and warehousing spaces across India's top five cities from January to September 2024, as reported by the global commercial real estate firm, Colliers. Leasing during this period reached an impressive 20.2 million square feet in Bengaluru, Chennai, Delhi NCR, Mumbai, and Pune.

The quarterly average space uptake rose from 5.7 million sq ft in 2021 to 6.7 million sq ft in 2024, reflecting a robust expansion, particularly in Delhi NCR and Chennai, which together accounted for 53% of the total leasing activity. Prominent were Third Party Logistics (3PL) companies, cornering a 35% share of overall demand.

Colliers' report highlights the engineering and FMCG sectors as key drivers of space demand. The appeal of quality Grade A spaces with sustainable and tech-enhanced features is expected to keep leasing strong, asserted Vijay Ganesh of Colliers India. This trend bolstered developer confidence, with a 29% increase in supply and a notable 35% share of completions in Delhi NCR.

Throughout Q3 2024, supply remained robust across the top cities, balancing the demand-supply equation and stabilizing vacancy rates at 12-13%. Large-scale deals, constituting about 40% of demand, were primarily driven by 3PL, engineering, and FMCG sectors.

(With inputs from agencies.)