Demand For Industrial And Warehousing Spaces Rises 23% In Q4 In Top 19 Cities: Report

Leasing of industrial and warehousing spaces rose 23% annually in January-March period this year to 135 lakh square feet across 19 major tier I, II and III cities of the country on demand from third-party logistics players and manufacturers, according to Savills India.

Real estate consultant Savills India on Thursday released the data on demand for industrial and logistics spaces.

The year started on an impressive note, with a strong absorption or leasing of 13.5 million, or 135 lakh, square feet in January-March 2024 compared to 11 million, or 110 lakh, square feet in the year-ago period.

Tier I cities witnessed 78% of the absorption, while tier II and III cities accounted for the remaining 22%.

Leasing of industrial and warehousing spaces in Tier I cities increased 25% to 10.5 million, or 105 lakh, square fee, during January-March 2024 from 8.4 million, or 84 lakh, square fee, in the year-ago period. Tier II and III cities witnessed a 20% growth to 3 million, or 30 lakh, square feet from 2.5 million, or 25 lakh, square feet.

Tier I cities include Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, Delhi-NCR, and Pune. Tier II and Tier III cities include Guwahati, Bhubaneshwar, Patna, Hosur, Coimbatore, Rajpura, Lucknow, Jaipur, Nagpur, Surat and Indore.

In terms of absorption, Delhi-NCR lead the pack with the highest contribution of 21% in January-March 2024, followed by Pune and Bengaluru, each at 12%. The contribution of Pune to the overall absorption increased from 7% in Q1 of 2023 to 12% in Q1 2024, while it decreased for Mumbai from 14% in Q12023 to 7% in Q1 2024.

"The growing trend of supply chain outsourcing has resulted in increased expansion of 3PL (third-party logistics) players in tier II and III cities, leading to higher demand for warehousing space. The manufacturing sector continues to account for over 25% of the total absorption, with improved manufacturing activities likely to drive increased uptake of manufacturing warehouses as well," said Srinivas N, Managing Director, Industrial and Logistics, Savills India.

The e-commerce sector is likely to witness a surge in activity going forward, he said, adding the sector is amplifying its urban distribution and extending its reach to tier II and III cities.

"The tier II and III cities are likely to witness significant growth as prominent hubs for sourcing, consumption, and distribution," Srinivas said.