India's industrial and warehousing sector is experiencing a remarkable transformation, with approximately 20 million sq. ft. of space leased in the first nine months of 2024. This surge represents a 17% year-on-year (YoY) increase across the top five cities in the country, indicating a resilient demand that is shaping the landscape of industrial real estate. According to the latest report from Colliers, the quarterly average space uptake has grown from 5.7 million sq. ft. in 2021 to 6.7 million sq. ft. in 2024. This growth trend underscores the consistent demand for industrial space, driven primarily by logistics and manufacturing sectors.

Key Market Insights

Delhi NCR and Chennai have emerged as pivotal regions, collectively accounting for 53% of the overall leasing activity during this period. The demand is being largely fueled by third-party logistics (3PL) companies, which dominated 35% of the total demand, followed closely by the Engineering and Fast-Moving Consumer Goods (FMCG) sectors. Specific micro markets are also emerging as hotspots for leasing activity. For instance, Bhiwandi in Mumbai recorded an impressive 3.7 million sq. ft. of leasing, while Oragadam in Chennai and Chakan-Talegaon in Pune also saw over 2.0 million sq. ft. of demand.

In the third quarter of 2024, the trend continued with the top five cities witnessing 7.3 million sq. ft. of industrial and warehousing demand, reflecting an 18% YoY increase. Delhi NCR led this surge, accounting for 33% of the total demand. The Bhaproda and Kulana micro markets were significant contributors to this growth, indicating a shifting landscape in industrial demand.

Driving Factors Behind Growth

The continued dominance of 3PL firms in driving quarterly demand is noteworthy, with Mumbai and Chennai leading the charge. Additionally, the Engineering sector accounted for 26% of the demand, particularly in the Chennai and Delhi NCR regions. The robust growth in these markets can be attributed to several factors, including increased logistics efficiency and India's rising profile as a global manufacturing hub.

As we look ahead, Colliers projects that the sector could close the year 2024 with record leasing figures ranging between 25 to 30 million sq. ft. This growth is anticipated to be bolstered by continued improvements in logistics infrastructure and a favorable business environment that attracts both domestic and international players.

Supply and Vacancy Trends

The supply of new industrial space has also surged, with Delhi NCR contributing 35% of total completions. Despite this increase in supply, vacancy levels have remained stable at around 12-13%, suggesting a healthy balance between supply and demand in the industrial sector. This stability is critical for sustaining growth in the coming years, as businesses look to secure optimal spaces for their operations.

Conclusion

In conclusion, India's industrial and warehousing sector is on an upward trajectory, marked by significant growth and sustained demand across key markets. The 17% YoY increase in leasing activity reflects not only the resilience of the sector but also the evolving dynamics of logistics and manufacturing in India. As the country continues to enhance its position as a global player, the outlook for the industrial real estate market remains promising.

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By keeping abreast of these trends and making informed investment choices, you can navigate the evolving landscape of India's industrial and warehousing sector successfully.