Policy initiatives push, logistics warehousing to new highs

The aggressive policy initiatives like granting of infrastructure status and implementation of the goods and services tax (GST) led to a 45% increase in leasing activity in logistics and warehousing segment in India's top seven cities in the first half of 2018 from a year ago to 10 million square feet, claimed, stats from CBRE South Asia, explaining that leasing activity primarily driven by consolidation and expansion moves of e-commerce, third-party logistics, retail, and engineering and manufacturing companies, which together accounted for more than 75% of the leasing reported during the period. The rise is attributed to policy reforms that the sector has witnessed over the past two years, particularly the implementation of the GST, as more and more companies in the sector consolidate their operations and locate closer to consumption hubs, thereby driving demand for larger warehouses. The average size of space leased increased to 90,000 sq.ft from around 75,000 sq.ft in the first half of 2017. As the sector witnesses the use of technology together with the government’s reform push, corporate across sectors would be driven to opt for large, modern warehouses, said chairman, India and Southeast Asia, CBRE, Anshuman Magazine. In the process, Bengaluru accounted for a fourth of the total leasing demand, followed by Delhi-National Capital Region at 21% and Mumbai at 20%. Chennai and Hyderabad also reported sizeable transaction activity and accounted for about 12% and 10% of the demand respectively. Smaller cities such as Kolkata, Ahmedabad and Pune collectively command 12% market share.