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Logistics leasing at all-time high of 33 million sq ft in 2019, up 30% report

The second half of 2019 also recorded historic leasing activity, with about 18 million sq ft space take-up; an increase of about 20% compared to the first half of 2019. 3PL firms accounted for about half of the leasing activity in 2019, an increase from 36% in 2018 to 48% in 2019. They were followed by e-commerce players with a share of about 18% in 2019.

, ET Bureau|
Last Updated: Feb 14, 2020, 03.58 PM IST
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MUMBAI: Logistics and warehousing leasing activity touched a record high of 33 million sq ft in 2019, up more than 30% from a year ago led by Bengaluru, National Capital Region and Mumbai markets. These three markets cumulatively accounted for around 60% of the overall space take-up during the year, showed a CBRE South Asia report.

In line with the annual trend, the second half of 2019 also recorded historic leasing activity, with about 18 million sq ft space take-up; an increase of about 20% compared to the first half of 2019.

3PL firms accounted for about half of the leasing activity in 2019, an increase from 36% in 2018 to 48% in 2019. They were followed by e-commerce players with a share of about 18% in 2019.

“The implementation of government initiatives such as the National Logistics Policy and the National E-commerce Policy as well as large-scale infrastructure development are expected to promote investment, thereby further improving the overall stock of warehousing space in India,” said Anshuman Magazine, Chairman & CEO - India, South East Asia, Middle East & Africa, CBRE.

According to him, the fundamentals of this sector are strengthening, backed by the recovery of domestic demand, improvement of the manufacturing sector and structural shift towards omnichannel retailing.

Supply addition in 2019 crossed 19 million sq ft rising by about 78% compared to 2018. About 70% of this supply was reported in NCR, Mumbai and Chennai. In the second half of 2019, about 8 million sq ft was completed, mainly in NCR, Chennai and Bangalore.

Backed by several government policies and reforms, the industrial & logistics sector witnessed investment of more than $200 million in 2019, primarily in the form of high-volume deals with $50-100 million each. These included the partial buyout of an industrial park in Mumbai and the acquisition of two warehouses in Chennai.

The leasing in this segment is expected to continue to be driven by 3PL firms and e-commerce players, along with retail corporates. However, 3PL occupiers are expected to turn more cautious about expanding their footprint due to tightening profit margins. I&L occupiers across sectors are likely to lease additional space in quality, investment-grade pipeline to be released by leading global players in cities such as NCR, Mumbai and Bangalore.

CBRE expects Mumbai, NCR and Bangalore to continue dominating the upcoming supply of logistics space in 2020 and rental growth to continue across cities.
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