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Warehousing & Logistics Witnesses Substantial Traction in Q3 2022

Warehousing & Logistics Sector Review Q3 2022’ from Vestian

BY Realty+
Published - Wednesday, 23 Nov, 2022
Warehousing & Logistics Witnesses Substantial Traction in Q3 2022

The seven key cities of the country saw around 7.55 million sqft of total warehousing and logistics space leased during the period Q3 2022, bringing up the YTD (Jan-Sep) warehousing absorption to 20.71 million sqft.

This depicted a decline of 13% in Q3 2022 when compared with the absorption during the corresponding period in the previous year 2021. The dip can be attributed largely to the fact that while the pandemic has subsided, the year 2022 - for the major part, had been unsettled by global headwinds arising from inflationary trends and the Russia-Ukraine conflict, leading warehousing players and occupiers to take a cautious stance. The dearth of adequate Grade A warehousing space supply is another factor behind the decline in YoY absorption.

However, on a sequential QoQ comparison basis, the growth in Q3 2022 was recorded at 30%, signifying that the market is gradually gaining confidence and the urgency that had risen over the geopolitical crisis in the first half of the year seem to be on the wane.

Mumbai accounted for the highest volume of leased deals in warehousing and logistics space during Q3 2022, it absorption recorded at 1.85 million sqft denoting 24% share of the total absorption, followed closely by Pune and Hyderabad with 21% and 20% share respectively.

Demand for warehousing space was largely driven by 3PL companies, followed by engineering firms, which accounted for almost 43% and 24% respectively, of the total absorption during the quarter. Nearly 66% of the total leasing during Q3 2022 was accounted for by the combined share of Mumbai, Pune and Hyderabad.

On an YoY comparison, NCR saw the highest improvement in absorption during Q3 2022, while Bengaluru saw a substantial decline. In contrast, sequential QoQ comparison showed Mumbai and Pune with the highest absorption growth during Q3 2022, as against the absorption in Q2 2022.

On the rental value front, Hyderabad witnessed a significant rise in weighted average rentals of deals that were inked in Q3 2022, to the tune of 16%, when compared with the transactions a year ago in Q3 2021. Pune and Chennai followed Hyderabad with an YoY average rental growth of 15% and 12% respectively.

Meanwhile, Mumbai saw its weighted average rentals of transacted space during Q3 2022 somewhat weaken on an annual basis - attributable to the fact that the older established warehousing market of Bhiwandi continued to account for majority of the transactions in Q3 2022, its relatively lower rents leading the weighted average rental values to reduce by 7% during the quarter.

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