CBRE South Asia Pvt. Ltd, India’s leading real estate consulting firm, today announced the findings of its latest I&L report, ‘CBRE Industrial & Logistics Figures H1 2022’. As per the report, Kolkata witnessed 1.6 million sq. ft. of supply as well as absorption during H1 2022.
Key sectors that drove absorption included retail (33%), engineering & manufacturing (22%) and electronics & electricals (16%). Key leasing transactions that were recorded in the city during H1 2022:
- Reliance Retail leasing 500,000 sq. ft. in Nilgiri Warehouse
- Godrej leasing 132,000 sq. ft. in Amta Industrial Park
- Croma leasing 120,000 sq. ft. in Shyam Business Park
Driven by transactions from retail and engineering & manufacturing firms, key micro-markets of NH-6 and Taratala – Budge Budge Trunk Road witnessed a surge in supply and absorption in H1 2022.
Kolkata led the supply addition after Mumbai on a pan India basis in H1 2022, together these cities accounting for about half of the project completions. The report points out small- to medium-sized deals dominated absorption in H1 2022, led by space take-up along NH-6.
The report findings reveal I&L sector leasing in India registered a dip of about 9% (Y-o-Y) and stood 12.8 million sq. ft. during the first half of the year. On a pan India basis, the space take-up was down by 17% on a half-yearly basis compared to 15 million sq. ft. recorded in H2 2021. However, the report highlighted that leasing activity would improve as continued land acquisition and development completions are lined up in H2 2022. Overall, on a pan India basis, the sector attracted about USD 144 million across greenfield and brownfield assets from both global and domestic players during H1 2022.
Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said, “While global supply chain pressures are easing, we anticipate occupiers to continue to follow ‘just-in-case’ strategies alongside ‘just-in-time’ ones to maintain agility. Increased focus on upgradation / expansion opportunities in tier I cities; new market penetration in lower tier cities and extension of local distribution networks in emerging logistics hubs are expected to drive leasing in the future.”
Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, said, “Focus on operational efficiencies could lead to growth in ‘flight-to-quality’ leasing. In line with the demand, we anticipate development completions by organized players to increase. Capital flow is expected to continue from global and local players, with both greenfield and brownfield acquisitions remaining attractive.”
Outlook & Trends – 2022
- Leasing sentiments to remain positive: Overall leasing in 2022 expected to touch 28-32 million sq. ft., with a growth of up to 12% Y-o-Y. Space take-up would be led by continued expansion of 3PL, e-commerce, engineering & manufacturing, retail and FMCG firms. Delhi-NCR, Bangalore, Mumbai and Chennai would continue to drive transaction activity, while markets including Ahmedabad, Kolkata and Pune are expected to witness increased momentum of leasing activity.
- Supply addition to pick up pace: As supply chain bottlenecks have started to ease, project completions are expected to improve in H2 2022. Overall, about 25-28 million sq. ft. of new warehouses are estimated to become operational in 2022, registering a growth of up to 12% Y-o-Y. Supply addition is expected to be dominated by Mumbai, Delhi-NCR, Chennai and Bangalore.
- Moving closer to key nodes: Occupiers are likely to continue to lease more space to cut down on transportation costs. E-commerce and 3PL players would thus prefer to take up space closer to consumer hubs. Moreover, 3PL occupiers dealing with cargo handling would focus on securing warehouses closer to key transportation nodes. Similarly, engineering and manufacturing players are likely to prefer warehouses in proximity to industrial hubs.
- Labour-saving building technologies to rise: Occupiers and developers are likely to adopt a broad range of advancement automations with the support of Big Data analytics, sensors and Internet of Things (IoT)-powered technologies to reduce labour dependencies.
- New-age supply to accommodate vertical storage: Warehousing facilities with features such as high ceilings to accommodate automated stacking systems, sufficient loading / unloading zones and power back-up provisions are likely to gain more traction.
- Rental growth to continue: Sustained growth in rentals across the cities is expected, owing to increased space take-up and addition of investment-grade supply. Rental growth in key micro-markets across cities would continue in H2 2022, especially, in investment-grade, tech-enabled and strategically located assets.