Leasing of industrial and warehousing spaces across eight major cities went up by 35 per cent during 2021 to 35.1 million square feet, driven by higher demand from third-party logistics and e-commerce players, according to Savills India.
The leasing stood at 26 million square feet in the previous calendar year.
Property consultant Savills India highlighted in a report that fresh supply rose 64 per cent to 36 million square feet from 22 million square feet during the period under review.
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Third-party logistics ( 3PL) players and e-commerce companies continued to drive warehousing demand, accounting for 62 per cent of the total absorption in 2021, followed by manufacturing sector at 14 per cent.
Among the major eight cities in India, Delhi-NCR led with the highest absorption in 2021 at 8.1 million square feet, followed by Pune at 6.5 million square feet.
Mumbai and Bengaluru saw absorptions of 6 million square feet and 4.6 million square feet, respectively.
Apart from eight major cities, Savills India reported that leasing of industrial and warehousing space stood at 8.6 million square feet in 11 tier II, III cities while new supply was at 8.9 million square feet.
The comparative figures of tier II and III cities were not available.
Savills noted that the rental values remained stable in 2021 across the major cities.
New projects were delivered with improved specifications and of high quality environmental, health and safety (EHS) standards.
The market witnessed 4,200-plus acres of manufacturing and warehousing land transactions across tier I and tier II cities. The industrial and logistics sector witnessed investments exceeding $1.5 billion in 2021.
“Continued interest in this asset class was due to its growth potential and stable returns. The market is likely to witness continued and growing interest from investors in this asset class in 2022 as well,” Savills said.
The overall industrial and warehousing space stock in tier I cities stood at 266 million square feet at the end of 2021.
Meanwhile, vacancy levels in tier I cities have increased from 8.4 per cent in 2020 to 9.4 per cent in 2021, the report said.