Industrial Space Leasing Surges 23% in 2023: C&W Report

New Delhi, Feb 22 (PTI) Leasing of industrial space for light manufacturing activities rose 23 per cent last year to 15.9 million square feet across eight major cities due to favourable government policies, according to Cushman & Wakefield.

The leasing of industrial space stood at 12.91 million square feet in the calendar year 2022.

Real estate consultant Cushman & Wakefield (C&W) on Thursday released its annual Logistics and Industrial report (L&I) report, which showed that Pune and Chennai accounted for 53 per cent and 24 per cent of the total leasing of industrial space in 2023 across eight major cities.

"The growth in industrial leasing indicates that manufacturing is on an uptrend on the back of healthy capacity utilization, implementation of business plans by domestic firms and incentivization of investments by multinationals through favourable government policies such as the multi-sector PLI scheme," the consultant said.

Industrial sheds available for lease primarily cater to light manufacturing activities, focusing on sectors such as automobile, engineering, and FMCG (Fast Moving Consumer Goods).

Heavy manufacturing companies typically opt for long-term lease or purchase of land parcels and undertake self-development of facilities to accommodate their specialized manufacturing processes and therefore figures related to them have not been included in the data.

As per the data, the leasing of industrial space in Pune rose from 7.69 million square feet a year ago to 8.37 million square feet in 2023.

In Chennai, the leasing more than doubled from 1.58 million square feet to 3.81 million square feet. Mumbai witnessed leasing of 1.05 million square feet in 2023 as against 0.03 million square feet in the preceding year.

Leasing of industrial space in Ahmedabad grew from 0.40 million square feet to 0.70 million square feet year on year.

However, the demand fell in Bengaluru from 2 million square feet to 1 million square feet. Delhi-NCR also saw a marginal decline from 1.06 million square feet to 0.98 million square feet.

In Kolkata and Hyderabad, there was no demand.

According to the report, the leasing of warehousing or logistics space fell 7 per cent from 40.39 million square feet in 2022 to 37.67 million square feet in 2023, across seven major cities.

Combining both industrial and logistics spaces, total leasing rose 1 per cent from 53.3 million square feet in the calendar year 2022 to 53.57 million square feet last year.

"Logistics & Industrial segment in India has defied global uncertainties to achieve a stable growth for two years in a row. This is fuelled by a confluence of factors, including strong economic and industry fundamentals, rapidly growing sectors like manufacturing and 3PL, and supportive government policies like the PLI scheme," said Abhishek Bhutani, Managing Director, Logistics & Industrials, Cushman & Wakefield.

He expected this momentum to continue in 2024, solidifying logistics and industry as a key driver of Indian real estate growth.

In 2023, warehouse leasing by e-commerce firms posted a decline in 2023, demand from third-party logistics (3PL) operators, manufacturing and retail firms remained strong.

"This shift suggests a possible growing trend of e-commerce companies outsourcing their logistics and warehousing operations to 3PL specialists, allowing them to focus on their core business activities," the consultant noted.

Mumbai emerged as the top warehousing hub in 2023, capturing a commanding 27 per cent share of the market. Chennai followed closely with 19 per cent, while Delhi and Pune held 18 per cent and 12 per cent shares, respectively.