I&L leasing up 26% to 8 mn sq ft in Q1'23

Hyderabad: Industrial & Logistics (I&L) sector leasing grew by 26 per cent Y-o-Y to 8 million sq ft in January-March quarter (Q1) of 2023, says a report. Supply during this period increased by 28 per cent Y-o-Y to 7.6 million sq ft, as per real estate consulting firm CBRE South Asia’s report ‘India Market Monitor Q1 2023’.

The report highlights the growth, trends, and dynamics across various segments of the real estate sector in India. According to it, Delhi-NCR drove absorption activity, with the leasing of 1.7 million sq ft, followed by Hyderabad at 1.5 million sq ft and Ahmedabad at 1.2 million sq ft in Q1 of 2023. The leasing share of these three cities in total leasing stood at 54 per cent. The collective share of Chennai, Kolkata and Hyderabad in supply addition stood at 59 per cent during Q1’23.

The 3PL (third-party logistics) had a majority share in leasing at 43 per cent, while e-commerce firms’ share improved and stood at 15 per cent during the Q1’23 period. Retail and engineering & manufacturing firms accounted for a share of 11 per cent each in leasing, followed by auto & ancillary corporates at 8 per cent. Overall, domestic firms had a 61 per cent share in leasing, while American corporations held a share of about 17 per cent.

Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE, said, "We anticipate that leasing momentum in the I&L space in 2023 will continue to be strong, with a demand of 32–35 million sq ft and would grow by 1–5 per cent on an annual basis. Despite macroeconomic uncertainties, the I&L sector saw robust growth in the first quarter of 2023. We anticipate supply to grow by 15–24 per cent Y-o-Y to reach 24-26 million sq ft, following the release of pent-up supply. We also foresee increased demand from FMCG, retail, and electronics & electricals sectors, while 3PL and engineering & manufacturing firms would continue to be key drivers of the leasing momentum this year."

Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, said, “We anticipate that rising occupier demand for improved warehousing spaces and storage efficiency would translate into a growing need for superior warehousing facilities. Moreover, occupiers' desire to achieve operational efficiency and reduce costs in a multi-user facility is projected to boost demand for large-sized spaces (more than one lakh sq ft)."