Demand for industrial realty in top cities rises 11% YoY in Jan-Mar 2023

NEW DELHI: Demand for industrial and warehousing across the top five cities remained strong during January-March 2023, rising by 11 per cent on a quarterly basis at 7.2 million sq ft, according to a report by Nasdaq-listed investment management company Colliers.

The January-March 2023 quarter also saw the highest leasing compared to the previous eight quarters, data compiled by Colliers showed. This sustained streak in leasing was backed by third-party logistics operators who continued to expand across large markets, forming 41 per cent of total leasing during the said quarter.

It was distantly followed by the FMCG sector at 12 per cent.

The pick-up in the offtake of industrial warehousing space fares well with the growth in private consumption in the domestic economy.

"3PL (third-party logistics) operators are targeting larger dense markets with good-quality infrastructure for expansion to ensure quick delivery of online orders. It contributed to more than 2/3 rd of the total leasing in Mumbai, led by select large deals. The average deal size by 3PL operators in the city was more than 2 lakh sq feet, 69 per cent higher than the pan India average. 3PL operators will continue to eye larger markets as they look to augment their distribution network," says Vimal Nadar, senior director and head of research, at Colliers India.

Further, Colliers data showed supply across the top five cities -- Bengaluru, Chennai, Delhi NCR, Mumbai, Pune -- declined 8 per cent on a yearly basis at 5.8 million sq ft, as developers remained watchful on the evolving demand scenario.

It attributed the decline in supply to higher raw material prices and increased logistics costs.

"Over the next few quarters, developers will continue to remain cautious and are likely to bring in supply to meet market demand, keeping market fundamentals intact," the report said.