According to property consultancy firm Knight Frank, the annual warehousing transactions in the top eight Indian cities will grow at a compounded annual growth rate (CAGR) of 19 per cent to 76.2 million sq ft by FY26 from 31.7 million sq ft in FY21.
The e-commerce segment is expected to take up 98 million sq ft, marking an increase of 165 per cent from FY17 to FY21, the Knight Frank report said. Third party logistics (3PL) and other sector companies are expected to take up 56 per cent (83 million sq ft) and 43 per cent (53 million sq ft) more space respectively over the same period.
The total land committed to warehousing development in the top eight cities is 22,488 acres which will translate to the buildable potential of up to 531 million sq ft, said the report. Existing warehousing stock already accounts for 329 million sq ft on this committed land, leaving about 202 million sq ft of potential warehousing space that can be developed in these land parcels.
The warehousing space per capita in India is significantly lower than in developed economies. With the critical business objectives that a supply chain serves, industrial and warehousing spaces have a long runway for growth.
The report said Pune and Chennai have the highest concentration of grade A stock due to the primary demand base of auto and auto ancillary occupiers. Mumbai and Delhi-NCR have a significantly lower proportion of Grade A warehouses.
Occupiers have shown a marked preference for grade A properties in recent years as they are much better geared toward tackling exigencies like those posed by the Covid-19 pandemic. Increased demand by e-commerce companies also resulted in increased preference for grade A properties. About 65 per cent of all transactions during FY21 were in such properties.