Leasing of industrial and warehousing spaces in five major cities rose 31 per cent during the first six months of this year mainly driven by growth in e-commerce activities, according to property consultant Colliers.
Leasing of industrial and warehousing spaces in five major cities rose 31 per cent during the first six months of this year mainly driven by growth in e-commerce activities, according to property consultant Colliers. The leasing of industrial and warehousing spaces increased to 10.1 million sq ft during January-June this year from 7.7 million sq ft in the corresponding period of the previous year despite the COVID-19 pandemic.
The five cities tracked by Colliers India are — Bengaluru, Chennai, Delhi NCR, Mumbai and Pune. New supply jumped over two-folds to 15.1 million sq ft from 7.3 million sq ft during the period under review. Third party logistics (3PL) companies and e-commerce firms accounted for almost 31 per cent and 22 per cent of the total demand, respectively.
“Demand for industrial and warehousing space will not only come from e-commerce, 3PLs, but also from medical suppliers, exporters and cold storage operators,” said Ramesh Nair, Chief Executive Officer India & Managing Director, Market Development, Asia, Colliers.
With same-day delivery becoming the norm, Nair said there will be significant activity in smaller facilities closer to cities, needed for last-mile delivery. “The market will also see sizeable repurposing of defunct spaces into Grade A industrial spaces,” he said. Nair expects demand from 3PL and e-commerce firms to remain resilient in the coming quarters.
The behavioral shift of consumers from offline to online shopping is contributing to increased demand across the spectrum of industrial and logistics property,” said Shyam Arumugam, Managing Director, Industrial & Logistics Services (India), Colliers.
According to the data, leasing of industrial and warehousing spaces increased in Bengaluru to 2 million sq ft during January-June 2021 from 0.8 million sq ft in the year-ago period.
In Delhi-NCR, the leasing rose marginally to 3 million sq ft from 2.9 million sq ft. Chennai saw rise in demand to 1.7 million sq ft from 1.3 million sq ft. The absorption or leasing of spaces in Pune increased to 2.7 million sq ft from 1.4 million sq ft. However, the demand fell in Mumbai that saw leasing of only 0.7 million sq ft during January-June 2021 as against 1.4 million sq ft in the same period of last year.
On the supply front, Colliers said that developers are focusing on completing their projects to meet rising demand. Overall vacancy rate was at just over 12 per cent with both Bengaluru and Chennai having the lowest vacancy rate of 6.3 per cent. Pune and Delhi NCR have the highest vacancy rates at 17.9 per cent and 17.4 per cent, respectively. Rentals appreciated in all the five cities during January-June 2021 compared to the last year. Bengaluru saw the steepest rise of about 19 per cent as demand outpaced supply.