Leasing of warehousing, logistics space down 9 pc across 7 cities in Jan-June

New Delhi: High inflation and global headwinds slowed down demand for warehousing and logistics spaces during January-June as leasing dipped 9 per cent annually across top seven cities, a report said.

The US-based property consultant Vestian said in a report that the total absorption across the seven key cities -- Mumbai, Delhi-NCR, Bengaluru, Chennai, Hyderabad, Pune and Kolkata -- was recorded at 13.16 million square feet.

"This depicted a decline of 9 per cent over the quantum of warehousing space leased in H1 2021," it pointed out.

The consultant attributed the slowdown in the market to "increasing inflation and global headwinds from geopolitical conditions impacting the supply chain ecosystem and business environment." Delhi-NCR, Pune and Mumbai accounted for 56 per cent share of the total absorption during the year.

The Delhi-NCR market saw leasing of 2.8 million square feet, followed by Pune 2.45 million square feet, Mumbai 2.17 million square feet, Bengaluru 1.8 million square feet, Chennai 1.5 million square feet, Hyderabad 1.4 million square feet and Kolkata 1.04 million square feet.

On the occupier front, the Vestian report found that 3PL (third party logistics) players accounted for the majority share of 53 per cent, followed by engineering & manufacturing companies at 15 per cent and auto & ancillary companies 10 per cent.

"Riding on factors such as increased e-commerce adoption, improved infrastructure, push towards manufacturing and conducive regulatory reforms, a number of international private equity firms/platforms have implied their entry into the sector," the report said.

Real estate firm Macrotech Developers (Lodha group) announced a partnership with Bain Capital and Ivanhoé Cambridge to set up a green digital infrastructure platform that will invest USD 1 billion for developing logistics & light industrial parks as well as in-city fulfilment centres across the country.

On the rental value front, Pune and NCR witnessed growth in weighted average rentals of leased space in H1 2022, to the tune of 3 per cent and 9 per cent, respectively compared with the year-ago period.

Bengaluru, Chennai and Hyderabad also saw an annual increase in weighted average rentals in H1 2022, each by around 4 per cent, while Mumbai and Kolkata saw slight weakening of their rental values.

On new trends and outlook, Vestian said there has been increased enquiries from non-metro centres for warehousing and logistics space.

Most large retailers, e-commerce players and manufacturing companies are strengthening their last-mile delivery supply chain to be close to customers and industrial areas.

"This bodes well for the future growth of the warehousing and logistics sector," it said.

Vestian projected that rental values are set to increase in the near future in view of the increasing cost of raw materials and improved grade of space provided with tech-led amenities on offer.