Industrial & Logistics Leasing In Mumbai Touches All-Time High

BY Realty Plus

In 2023, among the industry segments, 3PL players drove leasing with a share of about (73%), followed by engineering & manufacturing (16%) and retail firms (10%).

Key leasing transactions recorded in the city were: Skechers leasing 1,000,000 sq. ft. in Lodha Industrial & Logistics Park, Delhivery leasing 650,000 sq. ft. in Welspun One Logistics Park, DSV leasing 650,000 sq. ft. in Arham Logistics Park – Phase II

During the Jul-Dec’23 period, I&L leasing in Mumbai stood at 5.3 mn. sq. ft., and a supply addition of 1.3 mn. sq. ft. was recorded. Bhiwandi (NH-3) emerged as the front-runner in space occupancy in Mumbai. Large-sized deal closures dominated space take-up in the second half of 2023.

On a pan-India, the Industrial & Logistics (I&L) sector recorded an all-time high leasing activity in 2023, achieving an 8% Y-o-Y growth. Total leasing in 2023 stood at 38.8 mn. sq. ft. across eight cities. The drift towards more structured operational models of industries such as retail, FMCG, and manufacturing is driving an increased demand for efficient last-mile delivery solutions and warehouse solution providers are actively exploring markets to meet this demand. Total I&L supply was recorded at 36.0 mn. sq. ft., again a historic peak.

Owing to the culmination of several pre-leases, I&L leasing in Mumbai touched an all-time high, registering 9.9 mn. sq. ft. in 2023. Delhi-NCR, Chennai and Bangalore witnessed leasing of 7 mn. sq. ft., 6 mn. sq. ft. and 4.7 mn. sq. ft, respectively. Hyderabad, Kolkata, Ahmedabad, and Pune recorded steady annual leasing. Delhi-NCR, Chennai and Kolkata drove supply addition during 2023, accounting for a cumulative share of 58%.

I&L leasing in 2023 was predominantly steered by 3PL players, commanding a share of approximately 45%. Within this sector, occupants from diverse industries, including e-commerce, retail, and manufacturing, chose to outsource their supply chain operations to 3PL firms. This strategic move was aimed at meeting storage requirements, attaining increased flexibility, cost reduction, and overcoming challenges associated with labour sourcing. Notably, a significant portion of this leasing activity was spearheaded by domestic occupiers. Engineering and manufacturing companies constituted 17% of the total leasing activity—an increase from 15% in 2022 and 10% in 2021. Proactive government policies boosted by initiatives such as the Production Linked Incentive (PLI) scheme played a pivotal role in fuelling the growth of domestic engineering and manufacturing firms.

The majority of space uptake in 2023 was characterized by small-sized deals (<50,000 sq. ft.), representing approximately 43%, an increase from 39% in 2022. Medium-sized deals (50,000 – 100,000 sq. ft.) constituted around 26%, while large-sized transactions (more than 100,000 sq. ft.) comprised approximately 31% in 2023, showing a slight shift from 29% and 32% in 2022, respectively.

Notably, Mumbai, trailed by Delhi-NCR and Bangalore, led in large-sized deal closures, jointly capturing a share of about 61% in such transactions. Analysing sectors, 3PL, followed by engineering & manufacturing, and retail firms were the driving forces behind large-sized deal closures, collectively accounting for a cumulative share of approximately 70%. 

Driven by increased demand for high-quality spaces, restricted availability of quality supply in specific locations, and an escalation in land costs, rental values witnessed an annual rise in prominent micro-markets across cities, except in the case of Kolkata.

During Jul-Dec ‘23, the I&L sector witnessed a marginal increase in absorption, reaching 19.4 mn. sq. ft. This growth was spearheaded by consistent leasing activities from 3PL players (44%), engineering & manufacturing firms (18%), and retailers (14%). Mumbai, Chennai and Delhi-NCR played pivotal roles in space uptake during Jul-Dec’23, collectively contributing to approximately 59% of the total absorption. Over the same period, supply additions saw a 5% improvement, totalling almost 18.4 mn. sq. ft. Delhi-NCR, Bangalore, and Chennai led in the completion of developments, accounting for around 61% of the overall supply.

Tags : industry segments 3PL players I&L sector Lodha Industrial & Logistics Park Skechers e-commerce retail manufacturing