Mumbai has emerged as the leading city for Industrial & Logistics (I&L) leasing in India, witnessing a significant year-on-year growth of 22% in absorption. According to a report by CBRE South Asia, the city recorded 5.3 million square feet of leasing activity during the period of January to September 2023, accounting for a 19% share in pan-India I&L leasing.
Anshuman Magazine, Chairman & CEO of CBRE India, South-East Asia, Middle East & Africa, stated that the surge in quality supply additions and robust festive demand drove the remarkable growth in absorption in Mumbai’s I&L sector. With the completion of pending projects, the overall absorption is expected to reach a 5-year high by the end of 2023.
The report also highlighted that third-party logistics, engineering & manufacturing, and FMCG sectors were the major contributors to absorption in Mumbai. The city witnessed a supply addition of 3.4 million square feet during January to September 2023. In the July to September quarter, Mumbai saw a leasing of 1.3 million square feet and a supply addition of 0.9 million square feet.
Looking at the bigger picture, the I&L sector in India is projected to reach a 5-year high absorption mark of 36-38 million square feet in 2023 across the top 8 cities. Supply addition is also expected to surpass expectations, reaching 35-37 million square feet by the end of the year.
In terms of leasing activity, Mumbai, Chennai, and Delhi-NCR collectively accounted for a 56% share during the January to September 2023 period. Third-party logistics (3PL) players dominated leasing with a 45% share, followed by engineering & manufacturing companies (15%), auto & ancillary sectors (7%), FMCG (6%), and electronics & electricals (5%).
Ram Chandnani, Managing Director of Advisory & Transactions Services at CBRE India, anticipates a surge of interest from FMCG, retail, and electronics & electrical sectors driven by consumer demand. He also highlighted that domestic corporations took the lead in leasing activities, capturing a substantial 59% share. EMEA and APAC corporations also contributed significantly, with shares of 25% and 12% respectively during the July-September 2023 period.
Additionally, the report reveals a 57% year-on-year increase in supply addition during January to September 2023. Delhi-NCR, Chennai, and Kolkata collectively contributed 56% to the supply additions during this period.
In terms of leasing activities in the July to September 2023 quarter, Chennai recorded the highest absorption with 2.1 million square feet, followed by Bangalore and Mumbai with 1.7 million square feet and 1.3 million square feet respectively.
Magazine emphasized the growth potential of the I&L sector, highlighting the active participation of larger developers backed by institutional funds. He mentioned that rising rents are bolstered by the premium commanded by new, investment-grade, technologically advanced, and strategically situated assets.
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