Industrial and logistics segment takes 1.5 million sq ft in 6 months in Hyderabad

Hyderabad: Industrial and logistics segment in the city has absorbed 1.5 million sq ft warehouse space during January to June this year. The demand has been nearly 50 per cent more than the supply pegged at 0.9 million sq ft. Most of the space has been taken in the northern corridor due to the expansion […]

Hyderabad: Industrial and logistics segment in the city has absorbed 1.5 million sq ft warehouse space during January to June this year. The demand has been nearly 50 per cent more than the supply pegged at 0.9 million sq ft. Most of the space has been taken in the northern corridor due to the expansion of third party logistics players.

Just three players accounted for about 40 per cent of the demand. These include 2,75,000 sqft by Flipkart in an independent warehouse, 2,00,000 sq ft by TCI Supply Chain Solutions leasing in Indian Logistics Warehouse and 1,40,000 sq ft leasing by Safexpress in an independent warehouse during the first six months this year.

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Of the total space taken, third party logistics accounted for 46 per cent, e-commerce 21 per cent and retail nine per cent, said real estate consulting firm CBRE South Asia in its Industrial and Logistics report.

Led by a sustained demand for investment-grade assets, rental values increased on a half-yearly basis. Rents rose by 23-25 per cent in the northern corridor and about 5-12 per cent across other markets of Hyderabad.

The report further said the industrial and leasing sector in India registered a dip of about 9 per cent over last year to touch 12.8 million sq ft during the first half of the year. The report said leasing would improve as continued land acquisition and development completions are lined up in the second half of the year. Overall, on a pan India basis, the sector attracted about $144 million (about Rs 1,137 crore) in greenfield and brownfield assets from global and domestic players during the first six months.

“Focus on up-gradation and expansion opportunities in tier I cities, new market penetration in smaller cities and extension of local distribution networks in emerging logistics hubs are expected to drive leasing in the future,” said Anshuman Magazine, Chairman and CEO India, CBRE.

The report further said the leasing in 2022 is expected to touch 28-32 million sqft due to expansion of logistics, e-commerce, engineering and manufacturing, retail and FMCG firms. Project completions will improve in the second half of the year and about 25-28 million sq ft of new warehouses are likely to become operational in 2022 across India. E-commerce and logistics players will prefer to take up space closer to consumer hubs to reduce transportation costs.

Occupiers and developers are likely to adopt automations to reduce dependency on labour. Warehousing facilities with high ceilings will see demand, it said.