Approximately 11 million square feet of industrial and warehouse space were absorbed in Q1 2023, according to a report by Savills India, with tier I cities accounting for 77% of the immersion and tier II and III cities consider for the remaining 23%.
According to the research, the sector experienced a new supply of 12.4 million square feet during that time, of which 9.2 million square feet (74%) came from Tier I cities and 3.2 million square feet (26%) from Tier II and III cities.
The sector experienced a new supply of 12.4 million square feet during that time, of which 9.2 million square feet (74%) came from Tier I cities and 3.2 million square feet (26%) from Tier II and III cities.
Furthermore, there is a boom in new projects on the market that tout superior specs and excellent environmental, health, and safety (EHS) regulations. In recent years, this tendency has caused the percentage of grade-A supplies in cities to steadily rise. Grade A space represented for 52% of the market’s total supply and absorption in Q1 2023, demonstrating the substantial demand for high-quality space.
Delhi-NCR, Mumbai, Bengaluru, Chennai, and Pune have consistently made the largest contributions to India’s industrial and warehousing segment absorption throughout time. With the highest absorption rate of 19% in Q1 2023, Delhi-NCR continued to lead, closely followed by Mumbai with 14%. The absorption rates in Bengaluru and Chennai were 9% and 8%, respectively. Twenty-three percent of the total absorption was shared between Tier II and Tier III cities.
“By 2023, there will likely be a major increase in the industrial and logistics sector, with over 40 million square feet estimated to be absorbed. Emerging Tier II and Tier III cities, an increase in the demand for urban warehousing, and a significant shift in the Indian manufacturing industry are all predicted to contribute to this demand. The Performance Linked Incentives (PLIs) and effective multimodal connectivity strategies created for local and international distribution objectives further encourage the change. Managing Director of Industrial and Logistics at Savills India, Srinivas N, said.
By 2023, there will likely be a major increase in the industrial and logistics sector, with over 40 million square feet estimated to be absorbed.
With 40–50% of the entire demand, the 3PL sector has contributed significantly to the growth of the warehousing business over the previous two to three years. The manufacturing industry has also picked up steam, and the PLI is only one of the incentive programmes supporting increasing activity.
With 40% of the total absorption in the first quarter of 2023, the 3PL industry remained the main driver of warehouse demand. The retail sector accounted for 23%, the manufacturing sector for 23%, the FMCG/FMCD sector for 7%, and the manufacturing sector for 11%.