Gross absorption of industrial and warehousing real estate has shot up 7 per cent on year-on-year (YoY) basis, a report by real estate experts, Colliers India, said.
The report highlights that during the first 6 months of 2022, the gross absorption of real estate in the top 5 cities of India stood at 10.8 million sq ft. Of this, Delhi and NCR accounted for the highest activity of 28 per cent, with Pune at a close second with 24 per cent share on demand.
About 55 per cent of the gross absorption was led by third-party logistics players, followed by the engineering and automobile sectors with a share of 12 per cent each.
Explaining the trend, Shyam Arumugam, Managing Director, Industrial and Logistics Services, Colliers India said, “The first half of this year has seen several large deals with average deal size up 27 per cent YoY. Grade A supply in preferred micro markets across key markets in India continues to remain muted owing to construction slowdown on account of rise in construction costs. This has led to increasing in short-term rents. Third-Party Logistics players continued to dominate demand in the first half of this year and the trend is expected to continue in the next few quarters as well. We are also witnessing more Tier II city enquiries as key players are strengthening their last-mile delivery supply chain to be proximate to customers.”
Supply declines In a revealing trend, supply declined 24 per cent over last 6 months across 5 cities to about 11.8 million sq ft in the first half of 2022.
Vacancy on rise Grade A vacancy levels rose to 11.1 per cent at the end of Q2 2022, from 9.8 per cent in Q1 2022. This was largely led by strong leasing activity in Delhi-NCR, Chennai, and Pune. The rise in vacancy was led by Delhi-NCR where vacancy levels saw an increase during the quarter.
Large deals
Deals above 100,000 sq feet accounted for 75 per cent of the total leasing. This was led by larger deals by third-party logistics players and fast-moving consumer goods (FMCG) companies.
Deals by third-party logistics players led most of the activity through large deals. Pune accounted for 24 per cent of the leasing in H1 2022.
The automobile sector continued to lead the demand with a notable share of 40 per cent in total leasing of the city, followed by the third-party logistics sector at 27 per cent share.
“Occupiers, especially third-party logistics players and e-commerce players are increasingly taking up larger integrated warehousing space. On the supply side, we may see some limitations over the next few quarters as developers face supply chain constraints and rising input cost materials,” Vimal Nadar, Senior Director, and Head of Research Colliers India, said.
Despite low supply and steady leasing, vacancy levels rose during the quarter. Grade A vacancy levels rose to 11.1 per cent at the end of Q2 2022, from 9.8 per cent in Q1 2022. This was largely led by strong leasing activity in Delhi-NCR, Chennai, and Pune. The rise in vacancy was led by Delhi-NCR wherein vacancy levels saw an increase during the quarter.
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