Trends in Grade A Gross absorption (mn sq ft)
City | 2023 | 2022 | YoY change | Q4 2023 | Q4 2022 | YoY change |
Pune | 6.3 | 5.6 | 14% | 2.3 | 1.6 | 46% |
Mumbai | 5.5 | 3.9 | 41% | 1.5 | 1.2 | 27% |
Chennai | 5.1 | 2.7 | 85% | 1.6 | 0.6 | 185% |
Delhi NCR | 5.1 | 8.8 | -42% | 1.4 | 1.9 | -27% |
Bengaluru | 3 | 3.5 | -15% | 0.9 | 1.2 | -24% |
TOTAL | 25 | 24.5 | 2% | 7.7 | 6.5 | 19% |
Trends in Grade A Supply (mn sq ft)
City | 2023 | 2022 | YoY change | Q4 2023 | Q4 2022 | YoY change |
Delhi NCR | 6.9 | 7.8 | -12% | 2 | 1.9 | 1% |
Pune | 6 | 4.1 | 47% | 2.2 | 1.3 | 69% |
Chennai | 4.7 | 2.5 | 92% | 0.9 | 0.2 | 336% |
Bengaluru | 2.9 | 2.1 | 35% | 1.1 | 0.4 | 183% |
Mumbai | 2.7 | 2.7 | -2% | 0.2 | 0.3 | -8% |
TOTAL | 23.2 | 19.2 | 21% | 6.4 | 4.1 | 55% |
“The industrial and warehousing sector not only remained buoyant but emerged stronger in the second half of 2023. While the quantum of leasing by 3PL players continued to remain intact, there was accelerated growth in demand from FMCG, retail and automobile segments, with more than 30% YoY rise in each segment. Going ahead, with the rise in use of Electric Vehicles (EVs) and continuous development in associated infrastructure, the warehousing demand for automobile segment, is expected to grow manifold. With increasing footfalls in malls and physical stores, retail consumption is likely to increase, which in turn would spur higher demand for warehousing spaces. Overall, backed by rising manufacturing output, capital investments, demographic consumption patterns and supportive government policies, 3PL, engineering, automobile, retail and e-commerce segments will continue to see significant momentum in the next few years.” says Vijay Ganesh, Managing Director, Industrial & Logistics Services, Colliers India.
The final quarter of 2023 saw the highest ever quarterly leasing in the last two years
The final quarter of 2023, saw about 7.7 mn sq ft of leasing, a 19% YoY rise and the highest ever quarterly leasing in the last two years. Leasing activity during the quarter was significantly higher than the average 6.2 mn sq ft quarterly leasing of the last two years (2022 & 2023). Interestingly, with about 1.6 mn sq ft of leasing during Q4 2023 Chennai saw over 2.5X times activity as compared to Q4 2022. NH48 and NH-16 micro markets of Chennai saw the bulk of the demand during the quarter, largely driven by occupiers from engineering and 3PL players. While 3PL segment continued to dominate demand during the year, leasing by engineering firms surpassed 3PL segment during the final quarter of 2023.Large sized deals account for about 40% of the total leasing
During 2023, large deals (>200,000 sq ft) accounted for about 40% of the demand. Amongst these larger deals, 3PL companies continued to account for the bulk of share, followed by engineering and FMCG players. Mumbai followed by Chennai dominated the chunk of large-sized deals across the top five cities.“Historically, Delhi NCR and Pune have been driving the industrial and warehousing space demand in India. However, 2023 saw a more balanced distribution of leasing activity across the top 5 cities. While Pune was the frontrunner of industrial and warehousing space uptake in 2023, demand in Mumbai, Chennai and Delhi-NCR was almost at similar levels. Pune, particularly, was the only city to witness consecutive years of demand growth (2022 & 2023). Grade A space uptake in the city was largely driven by engineering and automobile players with about 25-30% share each, surpassing the leasing activity of 3PL players comfortably. All micro markets in the city saw about 2-8% growth in rentals with Talegaon and Hinjewadi recording the highest appreciation in rental values. Looking at the current market fundamentals, the city is poised to grow further in the next few years and will play a key role in demand diversification of the overall India industrial & warehousing market.” says Vimal Nadar, Senior Director & Head of Research, Colliers India.
Vacancy levels remain range bound amidst rising supply and healthy demand
With 21% YoY rise, the year saw about 23.2 mn. sq. ft. of new supply indicating improved developer confidence and an optimistic outlook for the next year. Aided by healthy demand, vacancy levels too largely remained steady registering only a 60 basis points (bps) YoY rise. On similar lines of demand, the final quarter saw the highest influx in supply at 6.4 mn sq ft, led by Pune and followed by Delhi NCR. Amidst healthy demand and supply, rentals remained rangebound on a quarterly basis; however, rose by up to 5% in select micro markets of Chennai and Pune.Trends in Grade A Vacancy rate (%)
City | 2022 | 2023 |
Bengaluru | 5.7% | 8.0% |
Chennai | 4.1% | 8.7% |
Delhi NCR | 13.1% | 12.6% |
Mumbai | 11.5% | 11.1% |
Pune | 6.4% | 6.2% |
Pan India | 9.4% | 10.0% |
About Colliers
(NASDAQ, TSX: CIGI) is a leading diversified professional services and investment management company. With operations in 65 countries, our 18,000 enterprising professionals work collaboratively to provide expert real estate and investment advice to clients. For more than 28 years, their experienced leadership with significant inside ownership has delivered compound annual investment returns of approximately 20% for shareholders. With annual revenues of $4.5 billion and $99 billion of assets under management, the company maximizes the potential of property and real assets to accelerate the success of their clients and our investors.