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

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 ThursdayCBRE South Asia Pvt Ltd released its report lsquoCBRE Industrial and Logistics Figures H2 2024rsquo highlighting the strong leasing momentum witnessed by the Industrial and logistics sectorAccording to the report Industrial and logistics sector leasing in the country reached a peak of 395 mn sq ft in CY 2024 across the top eight cities supported by a robust supply addition of 386 million sq ft during 2024 According to the report DelhiNCR 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 CY2024The Industrial and logistics sector space takeup was predominantly steered by the thirdparty logistics 3PL players accounting for a 41 per cent share in the overall leasing activity in CY 2024 Engineering and manufacturing EampM firms also remained active registering a space takeup share of 18 per cent during the year the report statedThe majority of space uptake in 2024 was led by smallsized transactions under 50000 sq ft representing 43 per cent of the total leasing volume As per the report mediumsized transactions 50000ndash100000 sq ft and largesized transactions exceeding 100000 sq ft each accounted for 28 per cent of the overall absorptionLeasing remained strong from July to December 2024 at 23 million sq ft recording a 17 per cent YoY growth This was driven by a revival in demand from leading ecommerce companies the expansion of quickcommerce operators aimed at enhancing customer service and minimising lead times and the aggressive growth initiatives by 3PL and fastmoving consumer goods FMCG playersConsistent with the trend observed throughout 2024 3PL providers led the space takeup 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 ecommerce companies each accounting for around 10 per cent of the total leasing volume With a 40 per cent share in the total space takeup during H2 2024 leasing was primarily driven by smallsized deals under 50000 sq ft the report statedldquoThe 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 sectors future Additionally we expect the incity warehousing and quickcommerce concept to become even more significant in 2025 DelhiNCR Kolkata and Bengaluru are anticipated to lead the absorption activity in 2025rdquo said Anshuman Magazine Chairman amp CEO India Southeast Asia Middle East and Africa CBREldquoAcknowledging the opportunities in untapped tierII 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 Indiarsquos leading tierII cities with Chandigarh Hosur Jaipur Lucknow and Vishakhapatnam projected to be the key focal points for warehousing expansion in these emerging regionsrdquo said Ram Chandnani Managing Director Advisory and Transaction Services CBRE IndiaIndustrial and logistics sector Outlook 2025Leasing activity expected to remain buoyantBuilding on the momentum observed in the latter half of 2024 we anticipate strong IampL leasing activity in the upcoming quarters supported by the introduction of highquality supply the finalisation of outstanding transactions and the resurgence of ecommerce demand DelhiNCR Kolkata and Bengaluru are anticipated to lead absorption activity in 2025In 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 efficiencyGovernment initiatives fostering Indiarsquos manufacturing ecosystem and growing consumer demand could bolster the shares of E and M FMCG retail and ecommerce companiesMajor ecommerce companies primarily concentrated on optimising their portfolios over the past two years are now resuming their expansion into key citiesThe concept of incity warehousing and quickcommerce is expected to become even more significant in 2025Organised players likely to further expand their footprintDriven by increasing demand for flighttoquality and green spaces institutional investorbacked developers are expected to continue capitalising on attractive opportunities in key markets This is anticipated to result in the development of stateoftheart warehouses equipped with sustainable featuresOverall new supply is projected to remain range bound to 2024 levels in 2025Chennai 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 2025Despite increasing land costs and extended acquisition timelines prominent developers investors would continue exploring acquisition opportunities across key warehousing hubs in both tierI and tierII cities