Leasing of warehousing and industrial space rose by 45 per cent to nearly 10 million sq ft in the first half of this year in 8 cities on higher demand from e-commerce, retail, manufacturing and third-party logistic companies, property consultant CBRE said today.
Leasing stood at 6.9 million sq ft during January-June period of 2017 as per the consultant's report 'India Industrial and Logistics Market View, H1 2018'.
"Leasing activity was primarily driven by consolidation and expansion initiatives of firms belonging to sectors such as e-commerce, 3PL, retail, and engineering and manufacturing, which together accounted for more than 75 per cent of the leasing reported during the review period," CBRE said in a statement.
The consultant attributed rise in leasing numbers to various reforms including the GST.
The average size of leased space increased from about 75,000 sq ft during H1 2017 to close to 90,000 sq ft in the first half of this year.
CBRE report found that the overall demand for the logistics and warehousing space was largely concentrated in Bangalore (25 per cent), Delhi-NCR (21 per cent) and Mumbai (20 per cent). Chennai and Hyderabad also reported sizeable transaction activity and accounted for about 12 per cent and 10 per cent of the demand, respectively. Smaller cities such as Kolkata, Ahmedabad and Pune collectively held a 12 per cent share.
"Going forward, we foresee the use of innovative technology solutions being the game-changer for the sector. As the sector witnesses the use of technology, coupled with the government's reform push, corporates across all the sectors would be driven to opt for large, modern warehouses," said Anshuman Magazine, chairman, India and South East Asia, CBRE.
He expected the demand-supply of logistic space to get a boost with the entry of various private equity firms and foreign players in this sector.
CBRE India's Senior Executive Director (Advisory & Transaction Services) Jasmine Singh said the leasing activity would remain upbeat over the next six months driven by 3PL (third-party logistics) and e-commerce sectors.
Rentals continued to appreciate along several micro markets across the cities. The micro-markets of NH-6 in Kolkata and Bhiwandi in Mumbai reported the highest appreciation, ranging between 15 per cent and 24 per cent.
Meanwhile, other micro-markets such as NH-2 in Kolkata, the Northern Corridor in Hyderabad, the Southern Corridor in Bangalore, NH-1 in Delhi-NCR and Aslali in Ahmedabad reported a rental appreciation of 3-5 per cent on a half-yearly basis.
The implementation of GST and the grant of infrastructure status to the logistics and warehousing sector has also led to increased investor interest, the report said.
Disclaimer: No Business Standard Journalist was involved in creation of this content
