Industrial and Logistics Trends in 2023

Industrial and logistics spaces continue to show resilience in 2023, thanks to occupiers adopting a multipolar supply chain strategy. Top five trends that can be game changers for the Industrial & Logistics market in 2023:

? Occupiers' demand driving leasing: With increased demand, absorption is projected to range between 32-32 million sq. ft., resulting in approximately 5% growth. Engineering & manufacturing and 3PL occupiers will play a significant role in driving this demand.

? Supply backed by institutional investors: Reaching 24-26 million sq. ft. In the previous year, several projects were delayed due to rising costs and deferment of space take-up by e-commerce giants. Metro cities like Chennai, Delhi, and Bangalore are expected to see a rise in the share of development completions compared to other cities by organized developers.

? Anticipated rental growth: In 2022, investments worth USD 1.8 billion were made by I&L players in these platforms, which are anticipated to convert into supply in the coming years. Despite this increase in supply, rising demand from occupiers is expected to maintain overall vacancy levels in check, resulting in upward rental movement.

? Leasing in the 3PL and E&M sectors: Leasing in these sectors has increased from 41% in 2021 to 48% in 2022. This increase is attributed to various factors, including occupiers outsourcing their supply chain processes for greater flexibility, increased transportation costs, and difficulties in sourcing labour. Occupiers with insufficient infrastructure are turning to 3PL players for support in this trend is expected to continue in 2023.

? Investment in technology to improve flexibility: Investing in technology has witnessed a rapid uptake in warehouses in recent years. This allows occupiers to enhance efficiencies, order handling capabilities, and address labour shortages. Technological advancements in warehousing include integrated warehousing systems, item picking and stocking, robots for operating storage shelves, product identification scanners for allocation and documentation, sortation scanners for determining loading docks, and destination of products.

Conclusion:

In 2023, the industrial and logistics market is anticipated to navigate global challenges by leveraging a multipolar supply chain strategy. With occupiers driving demand, backed by institutional investors, the market is poised for growth. Rental rates are expected to rise due to increasing demand and limited ready-to-move-in supply, while the prominence of 3PL and E&M sectors continues. Furthermore, investments in technology will play a crucial role in enhancing flexibility and efficiency.