Warehousing leasing dipped by 7 per cent in 2023 due to lower demand from e-commerce firms, but industrial leasing rose by 23 per cent as manufacturing gained momentum in the economy, according to data from consultant Cushman & Wakefield.

Close to 38 million square feet of warehousing space was leased in 2023, with a significant portion of the demand coming from third-party logistics (3PL) operators, as well as manufacturing and retail firms. The shift in leasing activity indicates 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, said the report by Cushman & Wakefield.

An uptick in manufacturing activity and higher capacity utilisation saw industrial leasing reach 16 msf in 2023, the report said.

“Logistics and Industrial segment in India has defied global uncertainties to achieve a stable growth for two years in a row,” said Abhishek Bhutani, MD, Logistics & Industrials, Cushman & Wakefield. “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. We expect this momentum to continue in 2024, solidifying L&I as a key driver of Indian real estate growth.”

Warehouse leasing

Mumbai was the top warehousing hub in 2023, commanding a 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.

However, Delhi-NCR saw a noticeable decline in activity, likely due to fewer major space transactions in the latter half of the year, the report said. “This was effectively offset by the continuous expansion of Chennai and Pune, ensuring consistent overall activity across India.”

Overall leasing activity in Chennai more than doubled last year at 10.37 msf, of which warehouse leasing accounted for 6.97 msf. In the sub-market of Oragadam, gross leasing reached 2.14 msf, a fivefold growth compared to 2022. Throughout the year, demand was predominantly driven by the 3PL and logistics sector, contributing 64 per cent to the yearly gross leasing activity, followed by the engineering and manufacturing sector with a 31 per cent share.

In 2023, manufacturing tenants leased 3.8 msf in Chennai, with Oragadam and Sriperumbudur dominating. The electronics and automobile sectors held the top spots in the city with 28 per cent and 24 per cent shares, respectively.