As per CBRE South Asia Pvt. Ltd., India’s latest report, Industrial & Logistics (I&L) space leasing in Mumbai increased by 69% Y-o-Y and stood at 4.0 mn. sq. ft. absorption in Jan-June’23 compared to 2.4 million sq. ft. during the same period last year.
Among the industry segments in Mumbai, 3PL firms drove leasing with a share of about 76%, followed by engineering & manufacturing firms (21%) and FMCG (3%).
Key lease transactions recorded in the city were, Gandhi Automation leasing 400,000 sq. ft. in Antariksh Greens, Patchems leasing 390,000 sq. ft. in Antariksh Logiworld, Yusen logistics leasing 380,000 sq. ft. in Antariksh Logiworld
In Mumbai, Bhiwandi (NH-3) led both supply and absorption. Led by expansion from 3PL occupiers, large-sized deal closures dominated space take-up in Jan-June’2023.
On a pan-India basis, the report highlights a 35% Y-o-Y surge in total leasing in Industrial & Logistics (I&L) sector, which stood at 19.1 mn. sq. ft. across 8 cities during Jan-Jul’23 period. The leasing activity is expected to sustain its momentum in the Jul-Dec’23 period, which is expected to be partly driven by festive season sales observed across the country.
Delhi-NCR, Mumbai, and Chennai led the leasing activity during the Jan-Jun’23 period, accounting for a 60% share in the total leasing. All cities, barring Bangalore, demonstrated an uptick in I&L leasing compared to the corresponding period last year.
A significant surge in supply was recorded, marking a 78% Y-o-Y increase, and stood at 17.7 mn. sq. ft. during Jan-Jun ‘23. This boost was primarily due to the completion of pent-up supply in a few cities. The overall supply was led by Chennai, Kolkata, and Mumbai, which collectively accounted for over half of the total project completions. Large developers, supported by institutional funds, contributed to a share of about 39% of the supply during this period. Delhi-NCR, followed by Chennai and Hyderabad, accounted for more than two-thirds of such project completions.
During Jan-Jun’23, 3PL players led the leasing activity with a share of 43%. Space take-up by the sector was led by occupiers from e-commerce, retail and manufacturing players outsourcing their supply chain processes to 3PL firms to fulfil their storage needs, achieve greater flexibility, reduce costs and avoid difficulties in sourcing labour.
E-commerce and retail companies accounted for approximately 9% share each in leasing. The leasing landscape also witnessed contributions from other sectors, including auto & ancillary (7%), FMCG (6%), and electronics and electricals (5%).
Space take-up was dominated by small–sized transactions (<50,000 sq. ft) with a share of about 44% in Jan-Jun ’23. The share of medium-sized transactions (50,000 – 100,000 sq. ft) and large-sized (more than 100,000 sq. ft) deals were about 24% and 32% respectively during Jan-Jun ’23. Delhi-NCR, followed by Mumbai and Chennai, dominated large-sized deal closures, together accounting for a share of about 65% of such deals. From a sectoral perspective, 3PL, followed by engineering & manufacturing and retail firms, drove large-sized deal closures and accounted for a cumulative share of about 70%.
Rental values increased on a half-yearly basis in key micro markets across cities, except Mumbai and Kolkata. Rents in Mumbai remained stable on a half-yearly basis in Jan-Jun ‘23, while Kolkata witnessed a marginal dip of 2-3% on a half-yearly basis owing to excess supply addition in the market.