Industrial and logistics space leasing surges to 38.8 million sq ft in 2023: CBRE

Real estate surge: The demand for industrial and logistics spaces skyrocketed to a record 38.8 million square feet across eight major cities in 2023, witnessing an 8 per cent annual surge, as per the latest report from real estate consultant CBRE.

The surge in leasing activity was primarily propelled by an unprecedented demand from third-party logistics (3PL) companies. According to Anshuman Magazine, Chairman and CEO, India, Southeast Asia, Middle East and Africa at CBRE, "This robust growth is a testament to the sector’s resilience despite global economic challenges."

The report indicates that leasing activities remained robust throughout the top eight cities, showcasing a steady annual space occupancy. Notably, 3PL players played a significant role, commanding an impressive 45 per cent share of the leasing landscape in 2023.

Industries such as e-commerce, retail, and manufacturing strategically opted to outsource their supply chain operations to 3PL firms. This move aimed at meeting storage requirements, achieving increased flexibility, cost reduction, and overcoming challenges associated with labor sourcing. Engineering and manufacturing companies constituted 17 per cent of the total leasing activity.

Government initiatives, including the Production Linked Incentive (PLI) scheme, played a pivotal role in fueling the growth of domestic engineering and manufacturing firms, according to the report.

While Mumbai touched an all-time high in leasing with 9.9 million sq ft in 2023, Delhi-NCR witnessed a dip to 7 million sq ft from 9.4 million sq ft in the previous year. Bengaluru, Kolkata, and Chennai experienced declines to 4.7 million sq ft, 3 million sq ft, and 6 million sq ft, respectively.

In contrast, Hyderabad saw an increase in demand to 4.3 million sq ft from 3.7 million sq ft. Pune reported a surge in leasing to 1.7 million sq ft from 0.7 million sq ft. Ahmedabad also witnessed growth, reaching 2.2 million sq ft from 1.2 million sq ft in the 2022 calendar year.

The report highlighted that due to increased demand for high-quality spaces, restricted availability of quality supply in specific locations, and an escalation in land costs, rental values experienced an annual rise in prominent micro-markets across cities, except in the case of Kolkata.

(With PTI inputs.)