Mumbai emerges as key contributors to supply addition accounting for over half of total supply in CY 2024: CBRE report

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Mumbai emerges as one of the key contributors to supply addition, collectively accounting for over half of the total supply in CY2024 in a report released by CBRE South Asia Pvt. Ltd, a real estate consulting firm on Thursday.

CBRE South Asia Pvt. Ltd, released its report, ‘CBRE Industrial and Logistics Figures H2 2024', highlighting the strong leasing momentum witnessed by the Industrial and logistics sector.

According to the report, Industrial and logistics sector leasing in the country reached a peak of 39.5 mn. sq. ft. in CY 2024 across the top eight cities, supported by a robust supply addition of 38.6 million sq. ft. during 2024.

According to the report, Delhi-NCR, Bengaluru, and Kolkata accounted for almost 60 per cent of the leasing activity during the year. Mumbai, Chennai, and Bengaluru emerged as the key contributors to supply addition, collectively accounting for over half of the total supply in CY2024.

The Industrial and logistics sector space take-up was predominantly steered by the third-party logistics (3PL) players, accounting for a 41 per cent share in the overall leasing activity in CY 2024. Engineering and manufacturing (E&M) firms also remained active, registering a space take-up share of 18 per cent during the year, the report stated.

The majority of space uptake in 2024 was led by small-sized transactions (under 50,000 sq. ft.), representing 43 per cent of the total leasing volume. As per the report, medium-sized transactions (50,000-100,000 sq. ft.) and large-sized transactions (exceeding 100,000 sq. ft.) each accounted for 28 per cent of the overall absorption.

Leasing remained strong from July to December, 2024 at 23 million sq. ft., recording a 17 per cent Y-o-Y growth. This was driven by a revival in demand from leading e-commerce companies, the expansion of quick-commerce operators aimed at enhancing customer service and minimising lead times, and the aggressive growth initiatives by 3PL and fast-moving consumer goods (FMCG) players.

Consistent with the trend observed throughout 2024, 3PL providers led the space take-up in H2 2024, accounting for a 42 per cent share. They were followed by E and M firms at 18 per cent, with retail and e-commerce companies each accounting for around 10 per cent of the total leasing volume. With a 40 per cent share in the total space take-up during H2 2024, leasing was primarily driven by small-sized deals (under 50,000 sq. ft.), the report stated.

"The impressive growth in the industrial and logistics sector highlights its resilience, even amidst global economic uncertainties. Leasing activity remained strong across key cities in 2024. The dominance of 3PL providers, capturing a significant 41 per cent share of leasing activity during 2024, underscores their pivotal role in shaping the sector's future. Additionally, we expect the in-city warehousing and quick-commerce concept to become even more significant in 2025. Delhi-NCR, Kolkata, and Bengaluru are anticipated to lead the absorption activity in 2025," said Anshuman Magazine, Chairman & CEO, India, Southeast Asia, Middle East and Africa, CBRE.

"Acknowledging the opportunities in untapped tier-II markets, occupiers are increasingly focusing on establishing local distribution networks to enhance proximity to a larger population and optimise their operational costs. Occupiers and investors are expected to remain active in India's leading tier-II cities, with Chandigarh, Hosur, Jaipur, Lucknow, and Vishakhapatnam projected to be the key focal points for warehousing expansion in these emerging regions," said Ram Chandnani​, Managing Director, Advisory and Transaction Services, CBRE India.

Industrial and logistics sector Outlook 2025

Leasing activity expected to remain buoyant

• Building on the momentum observed in the latter half of 2024, we anticipate strong I&L leasing activity in the upcoming quarters, supported by the introduction of high-quality supply, the finalisation of outstanding transactions, and the resurgence of e-commerce demand. Delhi-NCR, Kolkata, and Bengaluru are anticipated to lead absorption activity in 2025.
• In terms of the tenant sectors, 3PL firms are anticipated to maintain dominance in the logistics space as occupiers continue to outsource their supply chains to optimise operational efficiency.
• Government initiatives fostering India's manufacturing ecosystem and growing consumer demand could bolster the shares of E and M, FMCG, retail, and e-commerce companies.
• Major e-commerce companies primarily concentrated on optimising their portfolios over the past two years are now resuming their expansion into key cities.
• The concept of in-city warehousing and quick-commerce is expected to become even more significant in 2025.

Organised players likely to further expand their footprint

• Driven by increasing demand for 'flight-to-quality' and green spaces, institutional investor-backed developers are expected to continue capitalising on attractive opportunities in key markets. This is anticipated to result in the development of state-of-the-art warehouses equipped with sustainable features.
• Overall, new supply is projected to remain range bound to 2024 levels in 2025.
• Chennai, Mumbai, and Bengaluru are expected to be the primary contributors to the supply pipeline. These cities are likely to account for more than half of the overall development completions throughout 2025.
• Despite increasing land costs and extended acquisition timelines, prominent developers / investors would continue exploring acquisition opportunities across key warehousing hubs in both tier-I and tier-II cities.