When it comes to commercial real estate leasing activity, while the office market has been seeing a steady increase in performance, the industrial, logistics, and warehouse leasing market has also seen a significant uptick in major locations across India. Manufacturing and retail have gained an impetus thanks to the Make In India initiative catching on pretty quickly. That has led to the proliferation of warehouses and industrial spaces, along with logistics waypoints across the nation.
Starting from the top, Delhi-NCR is leading the race with 28% in Q1 leasing share and 36% in Q1 supply share across the cities. While there has been a supply of 2.3 million square feet in Delhi-NCR, the absorption has been around 1.7 msf. Both aspects have seen an increase in numbers QoQ. The primary drivers for Delhi-NCR have been 3PL, e-commerce, and electronics.
Pune comes up a close second in the Q1 2022 supply and leasing share among the top cities, with 26% in leasing and 20% in overall supply across the board. There has been an increase in the supply with 1.3 msf, adding up to a 46.1% YoY and a 15.7% QoQ increase. While the YoY absorption has seen a 9.8% decrease, there has been a 100% increase in the QoQ numbers, amounting to 1.6 msf. The automobile sector has been leading the leasing activity with a 43% share, closely followed by engineering and 3PL.
Again in Maharashtra, Mumbai comes up third in the list, with a 20% share in overall leasing and 16% share in overall supply in Q1 2022. Again the absorption in the Mumbai market has been slightly higher than the new supply, effectively causing no change in the vacancy levels YoY. The absorption has increased 100% YoY with a 1.3 msf space. While new supply has increased QoQ by 28.5 %, it has seen a decrease of 7.5% YoY. The demand has been singularly from the 3PL sector.
While Bengaluru comes up 4th in the leasing race, with 14% of overall leasing share, closely followed by Chennai scoring 12% on the same, the positions are switched when it comes to the supply share in Q1 2022. Chennai has a 15% contribution to overall supply, while Bengaluru is at 13%. Chennai has the lowest vacancy rate at 4.4%, closely followed by Bengaluru at 6.3%. 3PL and Engineering are the leading sectors for both cities when it comes to leasing. The third major leasing activity happens from Pharmaceuticals for Bengaluru and Automobile for Chennai.
Overall, considering the major centers of activity, India’s warehousing market seems to be doing great as absorption has increased by 10.7% YoY, vacancy rates have stayed rather stable at around 9%. The growth of ecommerce and manufacturing is evident from the fact that 50% of the leasing has happened due to demand from 3PL, followed by 17% from Engineering, and 12% from Automobile sectors.
Strata has been working tirelessly to source out the best possible warehousing assets across the nation so investors interested in commercial real estate can choose this lucrative form of investment to begin their foray into a stable, long-term wealth growth option.
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