Tier II & III cities see 17.4% growth in industrial and warehousing absorption: Savills
- Tier II & tier III cities accounted for 22% of the industrial and warehousing land absorption across
- At 16%, Delhi-NCR led the pack with the highest industrial and warehouse land absorption in 2022.
- 3PL (third-party logistics) and e-commerce sectors, together, accounted for 52% of the total warehouse space absorption in 2022.
AdvertisementIndia witnessed industrial and warehouse absorption of 46 million sq. ft in 2022, of which 36 million sq. ft belonged to tier I cities. Close to 10 million sq. ft belonged to tier II and III cities, as per the latest data from international real estate advisory firm,
Tier II and tier III cities collectively witnessed 17.4%
These tier II & III cities included Coimbatore, Guwahati, Indore, Nagpur, Lucknow, Jaipur, Rajpura,
Among the major cities in India, Delhi-NCR led the pack with the highest industrial and warehouse land absorption in 2022 at 16% followed by Mumbai at 14%. Pune and Bengaluru saw absorptions at 13% and 12% respectively, while tier II and tier III cities accounted for 22%, Savills shared.
The sectors that drove the absorption in 2022 were 3PL and ecommerce (52%); followed by manufacturing (16%) and retail sectors (13%).
Increased demand in 2023
As per Savills, the industrial and warehousing market in India witnessed transactions of 3,800 plus acres of land across tier I, II and III cities in 2022, of which 64% was private land and 36% was government land.
The warehousing sector in India also raised private equity to the tune of $1.5 billion in 2022. The interest in the market is expected to grow further in the future.
“The market is likely to witness increased interest from investors in this asset class in 2023 owing to inherent domestic demand and expansion of distribution networks in tier II and tier III cities,” Savills said in a statement.
As per Savills, tier II and III cities are poised to gain further momentum in 2023 and 2024 with ecommerce, retail and 3PL firms capitalizing on consumption-driven growth and pushing up the demand for warehousing space.
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“The industrial and logistics sector is likely to see absorption of over 40 mn sq. ft in 2023. This demand for space could stem from emerging tier II and III cities, growing demand for urban warehousing and a major transformation in the Indian manufacturing sector backed by
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