Cushman & Wakefield, one of the largest and the fastest growing real estate services firm in India, unveiled its annual Logistics and Industrial report (L&I), encapsulating the key highlights of the segment in 2023. According to the report, L&I leasing in India crossed the 50 MSF mark in consecutive years (2022 and 2023), showcasing sustained momentum and growth.
In 2023, warehousing leasing dipped slightly by 7% to 37.7 msf from 40.4 msf in 2022. According to the data, while warehouse leasing by e-commerce firms posted a decline in 2023, demand from 3PL operators, manufacturing and retail firms remained strong. This shift suggests a possible growing trend of e-commerce companies outsourcing their logistics and warehousing operations to 3PL specialists, allowing them to focus on their core business activities.
Mumbai emerged as the top warehousing hub in 2023, capturing a commanding 27% share of the market. Chennai followed closely with 19%, while Delhi and Pune held 18% and 12% shares, respectively. However, Delhi-NCR saw a noticeable decline in activity, likely due to fewer major space transactions in the latter half of the year. This was effectively offset by the continuous expansion of Chennai and Pune, ensuring consistent overall activity across India.
Industrial leasing, meanwhile, witnessed a 23% y-o-y growth in 2023 at nearly 16 msf, with Pune and Chennai accounting for 8.37 msf (53% of pan India leasing volume) and 3.81 msf (24% of pan India leasing volume) respectively. The growth in industrial leasing indicates that manufacturing is on an uptrend on the back of healthy capacity utilization, implementation of business plans by domestic firms and incentivization of investments by multinationals through favourable government policies such as the multi-sector PLI scheme.
In terms of cities, Chennai's logistics and industrial sector witnessed a stellar 2023, driven by robust leasing activity across warehouses and industrial sheds. With 10.78 msf of overall leasing in 2023, the city registered 2.1x growth over 5.16 msf recorded in 2022. For the full year 2023, warehouse leasing activity stood at 6.97 msf, nearly two-fold increase compared to 2022. Oragadam submarket witnessed robust demand with gross leasing reaching 2.14 msf, a 5x growth compared to 2022. Throughout the year, demand was predominantly driven by the 3PL/logistics sector, contributing 64% to the yearly gross leasing activity, followed by the Engineering & Manufacturing sector with a 31% share.
For the full year, manufacturing tenants leased 3.8 million sq ft in Chennai, with Oragadam and Sriperumbudur dominating. Electronics and automobile sectors held the top spots in the city with 28% and 24% shares respectively.
Abhishek Bhutani, Managing Director, Logistics & Industrials, Cushman & Wakefield, said, “Logistics & Industrial segment in India has defied global uncertainties to achieve a stable growth for two years in a row. This is fuelled by a confluence of factors, including strong economic and industry fundamentals, rapidly growing sectors like manufacturing and 3PL, and supportive government policies like the PLI scheme. We expect this momentum to continue in 2024, solidifying L&I as a key driver of Indian real estate growth."
