The industrial and logistics (I&L) sector in the top eight cities is projected to reach a five-year high in real estate space absorption, with an estimated 36-38 million square feet by the end of 2023, a commercial real estate services provider. During the period from January to September 2023, leasing in the I&L sector increased by 13% year-over-year. The combined real estate space absorption in the top eight cities amounted to 27.3 million square feet, up from 24.2 million square feet in the previous year. Mumbai, Chennai, and Delhi-NCR jointly represented 56% of the total leasing activity.
During this timeframe, third-party logistics companies took the lead in leasing, securing a 45% share, followed by engineering and manufacturing firms at 15%, auto and ancillary industries at 7%, FMCG at 6%, and electronics and electrical sectors at 5%.
Simultaneously, supply expansion witnessed a significant year-on-year increase of 57%, reaching 28 million square feet, with Delhi-NCR, Chennai, and Kolkata contributing 56% of the supply growth. The report further predicts that supply is expected to surpass previous years, reaching an estimated 35-37 million square feet by the end of the year, driven by the completion of pending projects. Anshuman Magazine, Chairman and CEO of CBRE (India, South-East Asia, Middle East, and Africa), stated, "With the increased supply of high-quality additions, strong demand during festive seasons, and the completion of previously delayed projects, we anticipate that overall real estate space absorption will reach a five-year peak".
Additionally, the active involvement of larger developers, supported by institutional funding, has contributed to approximately 40% of completed projects, highlighting the growth potential of the sector. In specific sub-markets, the potential for rising rents is strengthened by the premium commanded by new, investment-grade, technologically advanced, and strategically located properties.
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