Industrial & Logistics leasing in MMR touches high of 9.9 mn sq ft: report

Third-party logistics (3PL) players drove leasing in MMR with a share of about 73 percent, followed by engineering & manufacturing (16 percent) and retail firms (10 percent) in the MMR region in 2023. Bhiwandi emerged as the front runner in space occupancy.

Mumbai: The Mumbai Metropolitan Region (MMR) touched an all-time high of 9.9 million square feet in Industrial & Logistics (I&L) leasing in 2023, with the July-December half of this year contributing 5.3 million square feet, said the findings of ‘CBRE Industrial & Logistics Figures H2 2023’, a report by leading real estate consulting firm CBRE South Asia Pvt Ltd.

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Third-party logistics (3PL) players drove leasing in MMR with a share of about 73 percent, followed by engineering & manufacturing (16 percent) and retail firms (10 percent) in the MMR region in 2023. Bhiwandi emerged as the front runner in space occupancy.

MMR witnessed key leasing transactions such as global footwear brand Skechers leasing 10 lakh square feet of space in Lodha Industrial and Logistics Park in Palava City at Taloja Road bypass, delivery player Delhivery leasing 6.5 lakh square feet in Welspun One Logistics Park in Bhiwandi, and global transport and logistics player DSV leasing 6.5 lakh square feet in Arham Logistics Park-Phase II in Valsind village in Bhiwandi, the report said. The investment from Morgan Stanley Real Estate Investing (MSREI) came in August 2023 in Prakhhyat Group’s 0.7 million square feet Grade A warehousing space in K Square Logistics Park in Bhiwandi.

Pan-India, the Industrial & Logistics (I&L) sector recorded an all-time high leasing activity of 38.8 million square feet across the top eight cities in 2023, achieving an eight percent year-on-year growth. The drift towards more structured operational models of industries such as retail, FMCG and manufacturing drove the increased demand for efficient last-mile delivery solutions. Warehouse solution providers actively explored markets to meet this demand as the total I&L supply also touched 36 million square feet, again a historic peak, the report said.

While the culmination of several pre-leases helped Mumbai touch 9.9 million square feet of I&L leasing in 2023, Delhi-NCR witnessed leasing of 7 million square feet, followed by Bengaluru with 4.7 million square feet. Chennai and Hyderabad also recorded all-time highs of 4.3 million square feet, followed by Kolkata with 3 million square feet, Ahmedabad (2.2 million square feet), and Pune (1.7 million square feet). Delhi-NCR, Chennai and Kolkata drove supply addition during 2023, accounting for a cumulative share of 58 percent.

Pan India I&L leasing in 2023 was predominantly steered by 3PL players, commanding a share of approximately 45 percent. Within this sector, occupants from 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, the report said.

The report pointed out that a significant portion of this leasing activity was spearheaded by domestic occupiers. Leasing by engineering and manufacturing companies rose from 10 percent in 2021 to 17 percent in 2023. Proactive government policies, boosted by initiatives such as the Production Linked Incentive (PLI) scheme, played a pivotal role in fuelling the growth of domestic engineering and manufacturing firms, the report said.

Anshuman Magazine, chairman & CEO, India, Southeast Asia, Middle East & Africa, CBRE, said, “This robust growth is a testament to the sector’s resilience despite global economic challenges. Leasing activities across cities remained robust in 2023, showing a steady annual space occupancy. The leasing landscape in 2023 reflects a pronounced influence of 3PL players, commanding a substantial 45 percent share.”

Ram Chandnani, managing director, advisory & transaction services, CBRE India, said, “Witnessing diverse occupancies in I&L leasing from the 3PL, e-commerce, retail and manufacturing sectors indicates a streamlining of supply chain operations. The strategic alignment with 3PL firms signifies a collective pursuit among occupiers to address storage needs, enhance flexibility, curtail costs and mitigate challenges tied to labour-sourcing.”