According to a report on India’s warehousing and industrial sector, the cumulative Grade A and B supply is projected to reach 516 million square feet by 2026. The report also reveals that in H12023, India’s total leasing stock reached 344 million sq ft. During this period, approximately 15 million square feet of new stock were added, with Delhi NCR, Mumbai, and Bengaluru being the cities with the highest supply.
Regarding net absorption or new leases in the top eight cities, H1 2023 saw a total of 15 million sq ft. However, India’s gross absorption, which includes renewals and churnings across the top eight cities, slightly decreased from 23 million sq ft in H1 2022 to 20 million sq ft in H1 2023. Mumbai, Pune, and Delhi NCR were the top three locations in terms of demand during this period.
Third-party logistical players dominated the leasing and industrial sector across the top eight cities, accounting for 43% of the demand in H1 2023. This represents a significant growth compared to 35% in H1 2022. The FMCG and retail segment accounted for 15% of the leasing, while the auto and engineering segments had a 23% share, indicating strong demand for light manufacturing leasing.
Despite the global economic turmoil in recent quarters, the logistics and industrial sector has shown resilience post-pandemic. The Head of Logistics & Industrial in India expects the leasing market to pick up pace in the second half of this year, with an upward bias on rentals in select markets.
In H1 2023, the industrial sector experienced a year-on-year rental growth of 6.5%, with an average rental rate of INR 23 per sq ft per month for Grade A spaces. Pune, Chennai, and Bengaluru led the average rental growth in Grade A leasing stocks.