Mumbai industrial leasing volume doubles to 5.2m sq ft in 2021 

Leasing activity reached 2 million sq ft in the second half of the year.

Mumbai’s industrial sector recorded leasing activity of 2 million square feet (msf) in the second half of 2021. According to Cushman & Wakefield, the city recorded an overall leasing volume of 5.2 msf in 2021, a growth of 2X compared to the previous year. Bhiwandi remains the most prominent corridor in terms of warehouse leasing in H2 2021. 

Here’s more from Cushman & Wakefield:

Space take-up was mainly driven by 3PL and E-commerce companies, which constituted the bulk of the major occupiers who took up space during the year. The major transactions witnessed during the second half of 2021 included Skechers leasing 900,000 sf in Thane and Reliance Group leasing 300,000 sf and 200,000 sf at Patalganga and Pen-Khopoli Road, respectively. 

Going forward, Bhiwandi will retain its preferred status for warehousing firms. We expect Panvel and surroundings to emerge as warehousing hotspots over the next 18-24 months, driven mainly by the upcoming Navi Mumbai Airport. 

Multiple drivers of demand put upward pressure on land prices

Land prices witnessed a significant rise around Thane-Belapur Road (20% y-o-y), Taloja (10% y-o-y) and neighbouring areas due to high demand from data centre operators in 2021. Continued demand from data centre operators is expected to further drive land rates higher in the near future. Sustained demand from established warehousing operators and institutional players for setting up grade A warehousing parks in Bhiwandi and surrounding areas is expected to put some upward pressure on land rates. 

Besides Bhiwandi and Taloja, land prices in other warehousing sub-markets are expected to be range-bound in the coming quarters. The upcoming Navi Mumbai International Airport is likely to drive land rates higher in Panvel and nearby areas along with the JNPT & Uran submarkets. 

Headline rents in select locations witness growth

Land value appreciation along with considerable space demand in JNPT & Uran Road, and Pen-Khopoli road belt has induced a y-o-y growth of 5-10% in rentals in these submarkets. Taloja Industrial area is witnessing improved demand as well, resulting in y-o-y growth of 15-20% in rental values. 

We expect near term demand for Grade A industrial space to remain largely stable. Moreover, due to rising occupier preference for Grade A warehouses, leasing activity in Grade B & C warehousing spaces is expected to decline. Rental values are likely to remain within a narrow range in the near future.