India's industrial and warehousing sector soars in Q1 2023 on tier-I cities and grade-A space demand: Report
1 min read 03 May 2023, 02:59 PM ISTIndia's industrial and warehousing sector reported a robust absorption of nearly 11 million square feet, with tier-I cities driving 77% of the demand
PremiumIndia's industrial and warehousing sector reported a robust absorption of nearly 11 million square feet, with tier-I cities driving 77% of the demand, according to international real estate advisory firm Savills India.
The period saw a fresh supply of 12.4 million sq ft, of which tier-I cities contributed 74%. The market is experiencing a surge in projects with top-notch Environmental, Health, and Safety (EHS) standards, leading to an increased percentage of grade-A supply across cities.
The report reveals that grade-A space constituted 52% of both total absorption and supply in the market, signaling a growing appetite for premium space.
Delhi-NCR, Mumbai, Bengaluru, Chennai, and Pune were the top contributors to India's industrial and warehousing segment, with Delhi-NCR leading at a 19% absorption rate, followed by Mumbai at 14%. Bengaluru and Chennai registered absorption rates of 9% and 8% respectively, while tier-II and tier-III cities accounted for the remaining 23% of total absorption.
Srinivas N, Managing Director, Industrial and Logistics, Savills India, said, “The industrial and logistics sector is poised for significant growth in 2023, with a projected absorption of over 40 million sq ft. This demand is expected to be driven by emerging Tier-II and Tier-III cities, a growing need for urban warehousing, and a major transformation in the Indian manufacturing sector."
The 3PL sector has been a major contributor to the growth of the warehousing industry, accounting for 40-50% of the total demand over the last 2-3 years. The manufacturing sector has also gained momentum, with increased activity supported by various incentive schemes, including the Performance Linked Incentives (PLI).
In Q1 2023, the 3PL sector continued to be the driving force behind warehousing demand, accounting for 40% of total absorption. The manufacturing sector followed closely behind, accounting for 23%, with the retail sector at 11% and FMCG/FMCD at 7%.
