CBRE Report: 3PL Leads Industrial & Logistics Leasing in India for H1 2024
New Delhi, India – CBRE South Asia Pvt. Ltd. has released its latest report, ‘CBRE Industrial & Logistics Figures H1 2024,’ highlighting key trends in the Industrial & Logistics (I&L) sector for the first half of 2024.
Key Findings
The report reveals that third-party logistics (3PL) players are driving I&L leasing, capturing 40% of the total absorption. Engineering & Manufacturing (E&M) firms followed with an 18% share, while FMCG companies contributed 10%.
Despite a 16% decrease in supply additions, with 15.5 million sq. ft. added in H1 2024, leading cities like Chennai, Bengaluru, and Mumbai contributed 57% of the total supply. Larger developers backed by institutional investors contributed about 33% of this supply, with Chennai, Delhi-NCR, and Pune leading in project completions.
Market Outlook
As retail, e-commerce, and manufacturing sectors continue to rely on outsourcing inventory and delivery capabilities, the 3PL segment is expected to remain at the forefront of leasing activity. E&M firms are also anticipated to play a major role, supported by the government’s push to strengthen domestic manufacturing capabilities.
During January to June 2024, I&L leasing across eight cities saw a slight moderation, totaling 16.6 million sq. ft. However, a rebound in leasing activity is expected in the second half of the year, driven by fresh market entrants, a surge in inquiries, high-quality supply, and the finalization of pending deals, especially within the 3PL, retail, and FMCG sectors.
Expert Insights
Anshuman Magazine, Chairman & CEO, India, Southeast Asia, Middle East & Africa, CBRE, said, “The Indian industrial and logistics (I&L) sector is poised for a period of sustained growth, with promising indicators emerging for the latter half of 2024. While the first half witnessed a shift towards smaller transactions, the market’s underlying fundamentals remain robust.”
Ram Chandnani, Managing Director, Advisory & Transaction Services, CBRE India, added, “The industrial & logistics (I&L) sector is on an upward trajectory and this momentum will gain further acceleration at the back of a resilient economy and proactive policy imperatives.”
Investment Highlights
In Pune, IndoSpace invested USD 84 million in collaboration with the Maharashtra Government, while Chennai’s CapitaLand entered a deal with Casagrand, valued at USD 32 million, in the I&L sector in H1 2024.
Bengaluru, Delhi-NCR, and Kolkata collectively accounted for 58% of the total I&L space take-up in the first half of 2024. These cities also saw an expansion in space absorption compared to the same period in 2023, reinforcing their dominance in the I&L leasing landscape.
Future Projections
Leasing activity is expected to gain momentum in the second half of the year, supported by new market entrants, increased inquiries, and strong demand across various sectors. 3PL players will continue to dominate leasing activity as companies seek to optimize storage and delivery costs. Government policies supporting domestic manufacturing will increase the share of E&M firms in space take-ups. The retail and FMCG sectors are expected to see heightened activity, especially during the festive season. Despite a decline in supply additions in H1 2024, organized players and institutional investors are expected to expand their footprints, with investment-grade supply likely to rise to 55% by the end of the year.
Doubts Revealed
CBRE -: CBRE is a big company that helps people buy, sell, and rent buildings and land. They also give advice on how to use and manage properties.
3PL -: 3PL stands for Third-Party Logistics. These are companies that help other businesses store and move their products from one place to another.
Industrial & Logistics (I&L) leasing -: Industrial & Logistics leasing means renting out big buildings and spaces where goods are made, stored, and shipped.
H1 2024 -: H1 2024 means the first half of the year 2024, which includes the months from January to June.
Engineering & Manufacturing (E&M) -: Engineering & Manufacturing firms are companies that design and make machines, tools, and other products.
FMCG -: FMCG stands for Fast-Moving Consumer Goods. These are products that people buy often, like food, drinks, and toiletries.
absorption -: Absorption in this context means the amount of space that has been rented out or used up.
supply additions -: Supply additions refer to the new buildings and spaces that have been made available for rent.
Chennai, Bengaluru, and Mumbai -: Chennai, Bengaluru, and Mumbai are big cities in India known for their business and industrial activities.
rebound -: Rebound means to recover or improve after a decrease or drop.