Industrial & logistics space demand hit record in 2023 at 38.8 million sq ft in 8 cities: CBRE

In its latest report, real estate consultant CBRE said that the leasing of industrial and logistics spaces rose to 38.8 million square feet in 2023 from 36 million square feet in the previous year driven mainly by demand from third-party logistics (3PL) companies.

Industrial & logistics space demand hit record in 2023, image credit: Reuters

Demand for industrial and logistics spaces hit an all-time high across eight major cities last year with leasing activity rising annually by 8 per cent, according to CBRE.

In its latest report, real estate consultant CBRE said that the leasing of industrial and logistics spaces rose to 38.8 million square feet in 2023 from 36 million square feet in the previous year driven mainly by demand from third-party logistics (3PL) companies.

Anshuman Magazine, Chairman & CEO, India, Southeast Asia, Middle East & Africa, CBRE, said, "As we envision the future of the industrial and logistics sector, this robust growth is a testament to the sector's resilience despite global economic challenges."

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Leasing activities across the top eight cities remained robust in 2023, showing a steady annual space occupancy, he said.

"The leasing landscape in 2023 reflects a pronounced influence of 3PL players, commanding a substantial 45% share," Magazine said.

The consultant noted that 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.

Engineering and manufacturing companies constituted 17 per cent of the total leasing activity.

The proactive government policies and initiatives such as the Production Linked Incentive (PLI) scheme played a pivotal role in fuelling the growth of domestic engineering and manufacturing firms.Leasing of industrial and logistics spaces in Mumbai touched an all-time high, registering 9.9 million sq ft in 2023 as against 7.3 million square feet in the previous year.

In Delhi-NCR, the demand fell to 7 million square feet last year from 9.4 million square feet during 2022 calendar year.

Bengaluru saw a decline to 4.7 million square feet from 5.9 million square feet.

Kolkata too witnessed a dip to 3 million square feet from 3.8 million square feet.However, in Hyderabad, the demand grew to 4.3 million square feet from 3.7 million square feet.Leasing of industrial and logistics spaces in Chennai increased to 6 million square feet from 3.9 million square feet. In Pune, the leasing went up to 1.7 million square feet from 0.7 million square feet.

The demand for industrial and logistic warehousing spaces in Ahmedabad rose to 2.2 million square feet last year from 1.2 million square feet in the 2022 calendar year.

"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," CBRE said.

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