Bengaluru, Delhi NCR, Chennai lead in leasing market, GST rollout leads to 50 pct growth in warehousing space

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Published: July 28, 2017 4:57:34 AM

Implementation of the goods and services tax (GST) across the country has led to a 50% growth in the industrial and warehousing leasing space in H1 of 2017 compared to a year earlier.

GST rollout, GST, GST in india, GSt in warehousing space, GST impact, GST impact on warehousing space, goods and services tax, CBRE, FMCG companies, logistics operators, engineering firmsNearly 75% of leasing activity dominated by third-party logistics operators, engineering and manufacturing & FMCG companies. (Image: Reuters)

Implementation of the goods and services tax (GST) across the country has led to a 50% growth in the industrial and warehousing leasing space in H1 of 2017 compared to a year earlier. CBRE in its latest half yearly report released on Thursday said approximately 7.3 million sq ft of industrial and warehousing space has been leased in H1 across key cities in India. The demand for logistics and warehousing space was primarily concentrated in Bengaluru (24%), Delhi-NCR (21%) and Chennai (20%), indicating that the southern cities led leasing activity during the review period. Nearly 75% of leasing activity dominated by third-party logistics operators, engineering and manufacturing & FMCG companies, CBRE said.

Mumbai with a share of 13% was the only other city to witness sizeable transaction activity. Except for Kolkata and Pune, all other cities recorded an increase in absorption of space during the period. From a sectorial perspective, the growth in leasing activity was witnessed from all sectors, except pharmaceutical companies, which leased 20% less space when compared to the second half of calendar year 2016.

The leasing activity almost doubled in the NCR region when compared to H2 of 2016 due to strong demand, primarily driven by third-party logistic service providers (3PL) with 31% and FMCG companies (28%). Total demand from these two segments increased from 22% during H2 2016 to 67% during H1 of 2017. Rentals witnessed appreciation across key micro-markets during the review period.

In Bengaluru, leasing activity rose 180% compared to H2 of 2016. On the supply side, Bengaluru witnessed a healthy growth of over 30% in new supply. Chennai’s leasing activity increased by about 45% in the first half of 2017, compared to a year ago.

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