Skip to main content Skip to footer

Industrial and warehousing demand strengthens in 2022; up by 8%: Colliers

1536 Industrial Snapshots

Delhi-NCR leads demand with a 36% share

 

India, 20th January 2023: The year 2022 saw 24.5 million sq ft of industrial & warehousing demand, up 8% on a YoY basis across the top 5 cities in India. Average quarterly leasing during 2022 remained strong at 6.1 mn sq ft from 5.7 mn sq ft in 2021. Third-party logistics players (3PLs) remained the top occupier of warehousing space, contributing to about 44% of the total demand in the sector during 2022. As consumer demand remains upbeat, 3PL players, E-commerce and retail companies are leasing industrial and warehousing space to cater to this growing demand. At the same time, there has been a spurt in demand for spaces from engineering companies. Improved market sentiments are expected to keep the momentum in the sector high.

Delhi-NCR led the demand during 2022 with a 36% share, followed by Pune at a 23% share in total leasing backed by robust demand from 3PL, engineering & electronics players. Tauru road and Luhari saw a majority of the demand in Delhi-NCR, while Bhamboli continued to attract industrial and warehousing occupiers in Pune.

Trends in Grade A Gross absorption (mn sq ft)

City

2021

2022

YoY Change

Bengaluru

3.2

3.5

11%

Chennai

3.8

2.7

-28%

Delhi NCR

6.5

8.8

34%

Mumbai

4.6

3.9

-15%

Pune

4.6

5.6

21%

TOTAL

22.7

24.5

8%

Source: Colliers | Note: Data pertains to Grade A buildings

Trends in Grade A Supply (mn sq ft)

City

2021

2022

YoY Change

Bengaluru

1.4

2.1

55%

Chennai

4.2

2.5

-42%

Delhi NCR

11.9

7.8

-34%

Mumbai

4.1

2.7

-34%

Pune

2.5

4.1

61%

TOTAL

24.1

19.2

-20%

Source: Colliers |Note: Data pertains to Grade A buildings

The fundamentals remain strong for India’s Industrial demand and Production Linked Incentive (PLI) schemes announced for key sectors by the government are expected to further boost local production fueling demand for organized industrial spaces and warehousing facilities.  China plus one strategy is gaining more vigour and global companies are keen on shifting their manufacturing focus to India as part of their de-risking strategy. This would be a key trend to watch out for this year.

The Indian Logistics growth story continues to remain resilient and is further progressing on an accelerated growth trajectory owing to the focus on companies catering to changing consumer behavior across India. The convenience of shopping/returns, improved UPI adoption, omnichannel retailing, etc. have led to e-commerce demand growth thereby translating into demand for more warehousing capacities especially to augment last-mile connectivity in Tier I and Tier II cities this year.

says Shyam Arumugam, Managing Director, Industrial & Logistics Services, Colliers India.

 

During 2022, demand from engineering and electronics firms surged more than 2X (YoY), while their share in the leasing pie rose from 13% in 2021 to 28%. About 70% of leasing in engineering and electronics were large-sized deals (>1,00,000 sq ft) as they ramped up their operations across cities. Delhi-NCR and Pune were the most preferred locations for these firms.

“Large deals (deals > 100,000 sq ft) contributed about 70% of the demand during 2022. Amongst the larger deals, the share of 3PL, engineering and electronics companies remained the highest. Demand from engineering and electronics is picking pace with a rise in consumption and easing of supply chain bottlenecks. We expect engineering and electronics companies to continue to take up larger spaces in the next few quarters as fundamentals remain strong.”

says Vimal Nadar, Senior Director, Research Colliers India.

While demand remained robust in 2022, the markets remained restricted with supply. During 2022 there was about 19 mn sq ft new supply, a 20% decline YoY. Developers went slower with new supply as the cost of construction remained volatile during the year. They remained cautious and awaited pre-commitments. Consequently, this led to a drop in vacancy levels amidst robust demand. Overall vacancy levels lowered by 2.4pp during the year and stood at 9.4%. With limited new supply and robust demand, rentals across the key micro markets witnessed an increase in 2022.

Supply is likely to remain under check, thus rents are likely to firm up in the next few quarters. However, this would largely depend on how the economic & business environment would pan out. Going ahead, there will be a greater focus on sustainability and adoption of technology to bring in greater operational efficiency.

***

***

Media Contact:            

Sukanya Dasgupta

Senior Director & Head, Marketing & Communications| Colliers India

Sukanya.dasgupta@colliers.com |+91 9811867682

 

Riddhi Vira

Manager, Marketing and Communications | Colliers 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 63 countries, our 18,000 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 approximately 20% for shareholders. With annual revenues of $4.6 billion and $92 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

View expert

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. 

View expert