Cargo Breaking News
The industrial and logistics sector witnessed significant growth both in terms of absorption and supply. In 2023, the sector witnessed absorption of 49.4 mn sq. ft. indicating a 6.7% increase compared to the 46.3 mn sq. ft. absorption in 2022. Notably, tier I cities witnessed 75% of the absorption while tier II and III cities accounted for the remaining 25% according to International real estate advisory firm, Savills India. Tier II and III cities are growing significantly as sourcing hubs, aiding efficient distribution. The absorption is being led by a surge in demand from the manufacturing and retail sectors, as well as continued sustained demand from the 3PL sector. The report suggests that the sector witnessed a fresh supply of 62 mn sq. ft. in 2023 of which 46.2 mn sq. ft. (75%) was from tier I cities and 15.8 mn sq. ft. (25%) from tier II and III cities. The surge in supply was due to the delivery of projects across the cities by major developers in response to growing demand.
Absorption (mn sq. ft) across cities
Note: Tier I city includes Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, Delhi-NCR, and Pune. Tier II and Tier III cities include Guwahati, Bhubaneshwar, Patna, Hosur, Coimbatore, Rajpura, Lucknow, Jaipur, Nagpur, Surat, Indore, Kochi, Hubli, Vizag, Belgaum and Anantapur. The overall Grade A space accounted for 53% of the supply in 2023 up from 48% in 2022, while overall Grade A absorption accounted for 54% in 2023 up from 42% in 2022, indicating a significant increase in the supply and demand for graded and compliant buildings.
“Fueled by rising domestic demand and expanding distribution networks in tier II and III cities, the industrial and logistics sector is on a growth path. We anticipate an absorption of over 56 mn sq. ft. in 2024, with a projected growth rate exceeding 13%, and a supply surpassing 71 mn sq. ft. in 2024, with a growth rate exceeding 14%. The 3PL sector is expected to play a pivotal role, contributing over 40% to total absorption. The surge in supply chain outsourcing, coupled with increased manufacturing activity driven by government initiatives such as, Make in India and the PLI scheme, positions the manufacturing sector for robust leasing demand, with a projected contribution of over 30% to total absorption in 2024.” – Srinivas N, Managing Director, Industrial and Logistics, Savills India.
