Warehousing space leasing fell 29 per cent to 5.9 million sq ft and new supply declined 14 per cent to 9 million sq ft in the first quarter of this calendar year across eight major cities in the country amid coronavirus outbreak, according to JLL India.
The absorption and new supply of warehousing space stood at 8.3 million sq ft and 10.5 million sq ft, respectively, across eight cities — Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, Delhi-NCR and Pune.
Property consultant JLL India expects limited leasing activities during the second quarter of 2020 calendar year. New supply will also get deferred because of the lockdown to control the spread of COVID-19.
However, it said that “there can be gradual revival in the demand post lockdown as leases and active requests for proposals (RFPs) that were in various stages of closure may be executed.”
Increased enquiries from e-commerce and third party logistics players are expected, the report said, adding that the grade-A properties will be preferred due to adherence to additional safety norms.
“The pent up demand and project closures might be pushed by two quarters and Q4 will be an interesting quarter to watch out for.
The fundamentals remain strong and there is opportunity for India to capture the pie of manufacturing demand in case companies re-plan their global supply chains from business continuity plan point of view,” the report said.
As COVID-19 has significantly impacted businesses and the economy worldwide, consumers have shifted consumption activity to online transactions, the consultant said.
“In the short run, while few sectors like auto, heavy machinery and chemicals might renegotiate existing rentals, sectors such as FMCG, e-commerce, pharmaceuticals, cold storage will see increased growth and demand for additional warehouse spaces, as well as stringent health norms are facilities,” the report said.
Occupiers will realign their overall real estate strategy based on post COVID-19 scenarios, such as migrant labour availability, consumer demand and government support, it added.