Hyderabad’s industrial, logistics absorption outpaces supply

Hyderabad: Hyderabad saw Industrial and Logistics (I&L) leasing outpace supply in 2021. The Northern Corridor of the city led space take-up in the sector. Overall supply increased to 1.1 million sq ft in 2021 while absorption grew to 3.2 million sq ft in 2021. In terms of absorption, third-party logistics (3PL) accounted for a share […]

Hyderabad: Hyderabad saw Industrial and Logistics (I&L) leasing outpace supply in 2021. The Northern Corridor of the city led space take-up in the sector. Overall supply increased to 1.1 million sq ft in 2021 while absorption grew to 3.2 million sq ft in 2021.

In terms of absorption, third-party logistics (3PL) accounted for a share of 32 per cent, followed by retail contributing 27 per cent and e-commerce 12 per cent. Small-sized deals dominated absorption in the city.

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Also, increasing space take-up and addition of investment-grade supply resulted in increase of rents by about 6-18 per cent across Hyderabad.

Anshuman Magazine, chairman & CEO-India, South-East Asia, Middle East & Africa, CBRE said, “The continued emphasis on infrastructure development by way of enhancing India’s roadways, railways and logistical capabilities is expected to further boost the demand for the I&L.”

Hyderabad witnessed some key leasing transactions in 2021 that included DMart taking 3,00,000 sq ft of space in the western corridor, Flipkart taking 2,00,000 sq ft in the northern corridor while Reliance Retail took 2,00,000 sq ft of space in the northern corridor. All the properties were primarily warehouses.

Medchal in the northern corridor, Pedda Amberpet and Batasingaram in the eastern corridor, Pashamylaram and Patancheru in the western corridor, and Kothur and Shamshabad in the southern corridor are among the major hubs for the I&L sector in Hyderabad.

India outlook
The I&L sector witnessed a sharp rebound in 2021 with continued demand from 3PL and e-commerce players and completion of investment-grade developments. Pan-India, I&L space take-up accelerated during the year, rising by about 39 per cent y-o-y to cross 28 million sq ft.

Ram Chandnani, MD, Advisory & Transactions Services, CBRE India said, “Occupiers are focusing on bolstering supply chains, leading to growth in demand for I&L space in India. With the Government of India introducing various policies and infrastructure initiatives during the budget, we can expect further strengthening of the I&L sector and overall enhancement of logistics efficiencies.”

3PL firms accounted for more than 40 per cent of the leasing activity in 2021, followed by e-commerce, engineering & manufacturing, and retail players. Supply addition rose by 38 per cent y-o-y to touch 27 million sq ft during the year; development completions by domestic and global organised developers grew from 24 per cent in 2020 to 40 per cent in 2021.

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