India’s logistics and industrial leasing sector has surged past the significant milestone of 50 million square feet in the last two years, propelled by robust economic and industry fundamentals, particularly in burgeoning sectors like manufacturing and third-party logistics (3PL).
A recent report by Cushman & Wakefield attributes this remarkable growth to favorable government policies such as the Production Linked Incentive (PLI) scheme. In 2023, industrial leasing experienced a substantial 23% year-on-year growth, reaching nearly 16 million square feet. Pune and Chennai emerged as key contributors, accounting for 8.37 million square feet (53% of pan India leasing volume) and 3.81 million square feet (24% of pan India leasing volume), respectively.
This surge in industrial leasing reflects a positive trend in manufacturing, driven by healthy capacity utilization, the execution of business plans by domestic firms, and the incentivization of investments by multinational corporations through government initiatives like the multi-sector PLI scheme. Chennai, in particular, witnessed a stellar performance in 2023, marked by robust leasing activities across warehouses and industrial sheds. The city recorded an impressive 2.1x growth, reaching 10.78 million square feet in overall leasing, compared to 5.16 million square feet in 2022. Warehouse leasing activity alone stood at 6.97 million square feet, nearly doubling from the previous year.
The Oragadam submarket in Chennai emerged as a significant driver of demand, witnessing a fivefold growth in gross leasing, reaching 2.14 million square feet compared to 2022. The 3PL/logistics sector played a pivotal role, contributing 64% to the yearly gross leasing activity, followed by the engineering and manufacturing sector with a 31% share. Manufacturing tenants leased a substantial 3.8 million square feet in Chennai throughout the year, with Oragadam and Sriperumbudur dominating the landscape. The electronics and automobile sectors took the lead, holding 28% and 24% shares, respectively.
This unprecedented growth in logistics and industrial leasing underscores the resilience and vibrancy of India’s industrial landscape, driven by strategic government policies and a buoyant manufacturing sector.
