Leasing in logistics, warehousing sector hits all-time high of 24 mln sq ft in 2018: CBRE

Leasing in the warehousing and logistics sector rose by 45 per cent to a record area of 24 million sq ft on rising demand from e-commerce players and other companies, after the implementation of GST, according to property consultant CBRE.

Mumbai, national capital region (NCR), Bengaluru and Chennai accounted for more than 70 per cent of the leasing.

The overall space take-up in the logistics and warehousing sector crossed 24 million sq ft in 2018 - an all time high, CBRE said in its report 'India Industrial and Logistics Market View, H2 2018'.

The leased area in the sector was 16.5 million sq ft in 2017.

The implementation of goods and services tax (GST) led to far-reaching implications on industries, more so in the warehousing and logistics sector, it added.

Overall, in 2018, Mumbai, followed by NCR, Bengaluru and Chennai dominated the leasing segment, accounting for more than 70 per cent of the space take-up.

We are very positive about the government's vision to increase the sector's contribution to the overall gross domestic product (GDP) through more incentives for players and streamlining regulations, Anshuman Magazine, Chairman and CEO, India, South East Asia, Middle East and Africa, CBRE said.

With growing use of technology and government's push to the sector, he said companies would go for large modern warehouses to consolidate and expand their operations in the new GST regime.

This demand, we feel, would further be boosted by the entry of various private equity firms and foreign players in the Indian logistics market, Magazine said.

As per the findings, the count of large sized deals (more than 100,000 sq. ft.) almost doubled in 2018 compared to 2017.

The implementation of GST coupled with quality supply from reputed developers resulted in average size of deals increasing from 75,000 sq ft in 2017 to about 90,000 sq ft in 2018.

We foresee Indian e-commerce companies, third-party logistics (3PL) players and online grocery chains to increasingly use innovative tech solutions to improve inventory management, said Jasmine Singh, Senior Executive Director Advisory and Transaction Services, India, CBRE.

Leasing activity in the second half of 2018 was mostly led by 3PL service providers with a share of about 40 per cent, followed by engineering and manufacturing (22 per cent), e-commerce (21 per cent). Sectors such as retail, FMCG, electronics also contributed to the overall leasing.

The report further stated that rentals continued to appreciate for several micro-markets across cities.