Demand for industrial, warehousing spaces in Delhi-NCR falls 42% last year on high base effect

Delhi-NCR witnessed a sharp 42% decline in demand for warehouse and industrial spaces last year on high base effect and lower new supply, according to Colliers.

The gross leasing of Grade-A industrial and warehousing spaces fell to 5.1 million square feet in 2023 from 8.8 million square feet in the previous year. As per the Colliers India data, the gross leasing across five major cities rose 2% to 25 million square feet last year from 24.5 million square feet in the 2022 calendar year.

The share of Delhi-NCR in the total demand across five cities came down to 20% from 36% in the 2022 calendar year.

Giving more details about the Delhi-NCR market, Colliers India said the third party logistics (3PL) firms contributed 26% to the total gross leasing of spaces in 2023, followed by FMCG and electronic companies which accounted for 17% each to the total demand.

The new supply fell 12% to 6.9 million square feet in 2023 from 7.8 million square feet in the previous year.

The total stock of industrial and warehousing space in Delhi-NCR touched 51.5 million square feet at the end of the 2023 calendar year.

The average monthly rent stood at Rs 17-35 per square feet, a marginal increase from 2022.

"Farukhnagar and Faridabad micro-markets of the region saw the bulk of industrial and warehousing demand during 2023, accounting for about 75% share in demand," Colliers India said.

During 2023, 3PL players were the key demand drivers for the region having leased around 1.3 million sq ft of area.

Key logistics firms including DHL and Delhivery actively leased warehouse spaces during the last year.

On the demand outlook for this year, Vijay Ganesh, Managing Director, Industrial and Logistics Services, Colliers India, said, "With increasing footfalls in malls and physical stores, retail consumption is likely to increase, which in turn would spur higher demand for warehousing spaces."

"Overall, backed by rising manufacturing output, capital investments, demographic consumption patterns and supportive government policies, 3PL, engineering, automobile, retail and e-commerce segments will continue to see significant momentum in the next few years," he said.