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Gross absorption in industrial and warehousing facilities up 11% YoY; Grade A vacancy drops

1536 Industrial Snapshots

Third-party logistics players account for 50% of the absorption

 

India, 27 April 2022: Activity in Grade A industrial and warehousing facilities continues to be robust during Q1 2022 with gross absorption in the top 5 cities at 6.2 mn sq feet, an 11% increase from Q1 2021. The demand was led by heightened leasing in Delhi-NCR and Mumbai. Vacancy across Grade A projects also declined during the quarter, indicating a healthy demand environment in the sector. Overall, the demand was steered by robust warehousing demand from third-party logistics players, amidst strong consumer demand across sectors.

About 50% of the gross absorption was led by third-party logistics players, followed by the Engineering and Automobile sectors with a share of 17% and 12% respectively.

Trends in Grade A Gross absorption

City

Q1 2022 (mn sq ft)

Q1 2021 (mn sq ft)

Bengaluru

0.9

1.5

Chennai

0.7

0.8

Delhi NCR

1.7

1.2

Mumbai

1.3

0.3

Pune

1.6

1.8

TOTAL

6.2

5.6

Source: Colliers

Trends in Grade A Supply

City

Q1 2022 (mn sq ft)

Q1 2021 (mn sq ft)

Bengaluru

0.8

0.2

Chennai

1.0

1.4

Delhi NCR

2.3

4.0

Mumbai

1.0

1.1

Pune

1.3

0.9

TOTAL

6.4

7.6

Source: Colliers

“Demand for Grade A spaces remained robust with healthy take-up witnessed this quarter across key cities with NCR market leading the space take-up. Growing concerns about rising construction costs has exerted upward pressure on rents quoted for upcoming developments across markets. Developers are now looking to cater to build-to-suit demand keenly as opposed to speculative supply addition traditionally due to this increased input cost scenario. The trend is expected to continue in the next few quarters as Logistics and E-commerce players take up larger spaces in top cities as they scale up their operations in Tier-I cities”, said Shyam Arumugam, Managing Director, Industrial and Logistics Services, Colliers India.

Overall, grade A supply declined 16% YoY across the top five cities to about 6.4 million sq feet. Lower supply and robust leasing during the quarter led to a drop in vacancy. Grade A vacancy levels declined to 9.8% at the end of Q1 2022, from 11.8% in Q4 2021. This was largely led by strong leasing activity in Delhi-NCR, Mumbai and Pune.

Delhi-NCR dominated leasing activity with a share of 28%. The demand was led by large deals that accounted for about 91% of the total leasing. Deals by third-party logistics players led most of the activity through large deals. The majority of the activity was in the Luhari location. Pune accounted for 26% of the leasing. The automobile sector continued to lead the demand with a notable share of 43% in total leasing of the city, followed by Engineering at 20% share.

Large deals account for 80% of the leasing

Deals above 100,000 sq feet accounted for 80% of the total leasing. This was led by larger deals by third-party logistics players and e-commerce companies.

“We are seeing larger warehousing deals which has pushed up the average deal size by 30% to about 1.1 lakh sq feet. This shows that occupiers and third-party logistics players especially are increasingly taking up larger integrated warehousing space led by higher demand and shorter delivery timelines,” says Vimal Nadar, Head and Senior Director, Research, Colliers India.

 

Media Contact:

Sukanya Dasgupta

Senior Director & Head, Marketing and Communications| India

sukanya.dasgupta@colliers.com

+91 9811867682

 

Riddhi Vira

Manager, Public Relations | India

riddhi.vira@colliers.com

+91 9619776362

 

About Colliers

Colliers (NASDAQ, TSX: CIGI) is a leading diversified professional services and investment management company. With operations in 64 countries, our 17,000 enterprising professionals work collaboratively to provide expert real estate and investment advice to clients. For more than 27 years, our experienced leadership with significant inside ownership has delivered compound annual investment returns of 20% for shareholders. With annual revenues of $4.1 billion and more than $50 billion of assets under management, Colliers maximizes the potential of property and real assets to accelerate the success of our clients, our investors and our people.

 


Related Experts

Shyam Arumugam

Managing Director

Industrial & Logistics Services

Chennai

 Managing Director & Head - Industrial & Logistics Services | India 

"Real Estate Transaction professional with cognizance of multi-market trends in India and global connections across Asia specializing in Industrial and Logistics Assets"

Hi, I am Shyam Arumugam 👋 - nice to e-meet you.

I am the Managing Director & Head of the Industrial & Logistics Services business for Colliers in India with 11 offices spread across Delhi, Gurugram, Noida, Mumbai, Pune, Hyderabad, Bangalore, Kolkata, Kochi Ahmedabad & Chennai. Colliers is well poised to cater to local, national and international clients across India providing them superior service delivery and in-depth market knowledge to take well informed real estate decisions on land, factories & warehouses.

Over the last 17 years, I have had the opportunity to service global clients providing hands-on Consulting, Valuation & Brokerage services of Industrial, Logistics and Office Assets. A complete believer of the "India Growth Story" and positioning Real Estate as Real Advantage for High-Growth organisations.

I have thrived thus far and continue to do so in a competitive environment seeing multiple Real Estate cycles over the years. My specialization is to manage high performance teams and mentoring hard-hitters in the Industry that accelerate our client success. A Finance Post Graduate with Civil Engineering Bachelors' Degree I am able to enable clients to take informed decisions in tough situations and deliver long term value creation. I am proud to be an esteemed member of the Royal Institute of Chartered Surveyors (MRICS), UK.

Key Specialties & Areas of Expertise:

⏩ Industrial Real estate & Land for Industrial / Logistics Parks across India
⏩ Warehousing - Big Boxes, Fulfillment Centers, 3PL, Mid-Mile & Last Mile
⏩ Consolidation Strategy Formulation Expert
⏩ Factory Re-location Specialist
⏩ Corporate Location Strategy Formulation - Manufacturing, Warehousing & Data Centers
⏩ Optimal Development Strategy Formulation
⏩ Purpose-Built Development Expert

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Vimal Nadar

Senior Director

Research

Mumbai (Corporate Office)

Vimal has a cumulative of about 14 years post qualification (as a Chartered Accountant) experience and recently joined Colliers as the Head of Research. He is responsible for leading and managing India Research operations. He will focus on thought leadership though timely and insightful content to support business growth while elevating the brand  value of the company. Prior to this, he led research thought leadership at JLL and Cushman & Wakefield. He began his professional career with Crisil; business research and consulting being his core areas of work. His areas of expertise include business assessment, demand-supply analysis, market entry strategy, strategic road mapping, etc in sectors such as Real estate, Cement, BFSI and other sub-sectors within the infrastructure domain. 

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