In the first half (H1) of 2023, the industrial and warehousing sector in India witnessed robust growth, with a total absorption of 22.4 million square feet (msf), representing a 7% surge compared to 20.9 msf in H1 2022, according to a Savills India report.
The report highlights that Tier I cities accounted for 75% of the total absorption during the first half of 2023, while Tier II and III cities contributed the remaining 25%. Notably, Tier II and III cities experienced a significant annual growth of 22% in absorption, rising from 4.1 msf in H1 2022 to 5.0 msf in H1 2023.
Among Tier I cities, Mumbai emerged as the top city with the highest absorption rate of 18%, followed by Delhi-NCR at 14% and Pune at 10%. Chennai and Bengaluru both witnessed a 9% absorption rate.
Grade A spaces constituted 53% of the total absorption in the country during H1 2023, marking a substantial increase from 36% in H1 2022. This shift can be attributed to a greater emphasis on quality and compliance.
Simultaneously, the industrial and warehousing sector experienced a new supply of 27.4 msf during the same period, indicating a remarkable 36% growth compared to the previous year’s 20.2 msf.
The report highlights the significant influence of the third-party logistics (3PL) sector, which accounts for 40-50% of the overall demand. Additionally, the manufacturing sector has witnessed increased activity supported by various incentive programs, contributing to the growing demand in the industry.
