With the growth in logistics and industrial sectors, Grade A warehousing market in the country is set to cross 45 mn sq ft this year with H1 2024 clocking 20.3 mn sq ft and H2 2024 projected to cross 25 mn sq ft. The rapid growth is driven by Mumbai Metropolitan Region (MMR), Pune, and NCR, which collectively account for 64% of the total demand, a new report by Credai and CRE Matrix has shown.
The country’s Grade A warehousing stock is projected to surpass 300 mn sq ft by 2025. It currently stands at 238.5 mn sq ft, providing a promising outlook for stakeholders.
The report also revealed that the warehousing demand/ leasing of 20.3 mn sq ft in H1 2024 far surpassed new supply, which stood at 14.8 mn sq ft. The segment also recorded the lowest ever vacancy rate of 8.2%.
It underscored the prevalence of regional trends, such as a 25% increase in Grade A supply in Bengaluru between Q1 and Q2 2024 showcasing the steady growth of warehousing infrastructure in the city.
Pune has also witnessed demand for Grade A warehousing space, contributing significantly to overall demand in the market. In H1 2024, Pune alone accounted for 48% of the total demand registered in the MMR-Pune region. Despite a surge in demand, Pune faces a supply shortage, with the demand-to-supply ratio hitting 2x, indicating the potential for significant new development in the coming quarters.
Similarly, Chennai registered a demand-to-supply ratio of 1.6x, highlighting the increasing attractiveness of its logistics infrastructure. With a vacancy rate of just 7.4%, the city is poised to maintain its upward trajectory as more industries look to establish a presence in this vital southern market. This also indicates the region’s emerging role as a logistics and manufacturing hub.
Warehousing rentals increase by 4% YoY
Due to this gap between the burgeoning demand for high-quality warehousing, the warehousing rental rates in H1 2024 also increased by 4% YoY, across the country. The persistent demand is primarily driven by third-party logistics, manufacturing, and electronics sectors accounting for nearly two-thirds of the demand for Grade A spaces, the report noted.
“The Indian real estate market is evolving rapidly, with specialized segments like warehousing complementing the robust growth of the more traditional segments. Cities like Pune and MMR have emerged as critical industrial hubs, accounting for nearly 50% of the Grade A warehousing demand. As these regions continue to develop – with increased investments, the establishment of new manufacturing units, and the rise of e-commerce, we foresee sustained momentum in demand going into Q4 2024 and the new year,” said Boman Irani, president, CREDAI.
“Global manufacturers are either shifting from China or expanding into India and on the other side, we are seeing a massive expansion of e-commerce and 3PL based on the consumption patterns in tier-I and tier-II cities of India. The India advantage of low wages, technology push in manufacturing coupled with ease of doing business will be the driving factors over the next few years as we leapfrog to 300 msf stock by 2025-end,” said Abhishek Kiran Gupta, co-founder and CEO, CRE Matrix.
