Industrial leases and warehouse increased 10 million sq ft in H1 2021: Colliers

Rental of industrial estates and warehouse affected 10.1 mn sq ft on H12021 in the top five cities of Bengaluru, Chennai, Delhi NCR, Mumbai and Pune, the report said.

Demand was largely driven by foreign logistics companies (3PL), followed by commerce firms that made up about 31% and 22% of total demand respectively, he said.
Delhi NCR led the rental with an average share of 30.2%, followed by Pune and Bengaluru with a share of 27.2% and 20.0% respectively. About 59% of the total lease was in the industrial and warehouse facilities in Grade A which showed an increase in the trend in high-rise buildings.

The average length of mortgage leases is also longer, ranging from 6 to 9 years and longer in some cases, the report said.

“The need for industrial and warehouse space will not only come from e-commerce, 3PLs, but also from medical retailers, exporters, and refrigerators. Since day-to-day deliveries have become commonplace, there will be significant work in small areas close to cities, required for the delivery of the last mile. The market will also see a major duplication of vacant posts in Grade A industrial areas, ”said Ramesh Nair, India’s chief executive officer, and managing director, Market Development Development, Asia.
“We expect the demands from 3PL and e-commerce firms to remain strong in the residential areas, increasing the demand for integrated warehouses with advanced technology solutions such as warehouse management systems,” he said.

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Prior to the market supply, the market saw a new completion of 15.1 million meters in H1 2021, which is a double increase from H1 2020. Developers are rushing to complete construction to meet the growing demand for industrial and warehouse space.

Delhi NCR handled about 63% of the new supply delivered to H1 2021, followed by Mumbai and Kennai accounting for 15% and 11% pie respectively.
The overall vacancy rate was just over 12% and Bengaluru and Chennai had the lowest vacancy rate of 6.3% and Pune and Delhi NCR were the highest at 17.9% and 17.4% respectively. In every city there has been an increase in rental housing on H1 2021 from last year. Bengaluru has seen a further 19% increase as demand exceeds consumer demand, the report said.

“Changes in consumer behavior from offline shopping are contributing to increased demand across the range of industrial and retail stores. Third-Party Logistics players affiliated with E-commerce companies are still in need of operators of the H1 2021 warehouse (more than -50% of demand in the top five cities), “said Shyam Arumugam, chief executive, Industrial & Logistics Services (India).

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“On the supply side, we have seen an increase in the supply of more than 15 million sq ft added to all markets. However, rising prices / volatility (especially of metal) have posed challenges to the developers’ rapid development plans. We anticipate continued growth in demand for storage as we enter the holiday season and expect that demand will continue to increase by H2 2021, “he said.

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