Institutional Grade A warehouses have taken up 381 million sq. ft in Ahmedabad, Delhi NCR, Kolkata, Mumbai, Pune, Bengaluru and Hyderabad. e-commerce fell to 1% in Q1 of 2024 with smaller companies outsourcing logistics to 3PL players and upgrading white spaces in existing warehouses.
CT Bureau
The warehousing sector has grown in the past four years as the sector recalibrates to adjust itself to global supply chain restructuring, post COVID. Supply is primarily driven by institutional Grade A warehouses, taking the total supply of warehousing supply in top eight cities to 381 million square feet in first quarter of 2024, projected to reach 595 million square feet by 2027.
Key growth drivers
The rising demand is primarily driven by third party logistics players as most companies find it suitable to outsource non-core/logistic activities. 3PL is a significant 43 per cent in first quarter of this year, outpacing all other sectors in warehousing demand. Manufacturing leases have taken centre stage post COVID,
given the advantage of faster time to operate and pre-approved status for many manufacturing industries.
Sectors that have taken advantages include auto, fast moving consumer goods (FMCG), fast moving consumer durables (FMCD), electronics among others. Manufacturing leasing has seen exponential growth of 65 per cent CAGR since the pandemic to reach 14 million square feet in 2023 and projected to touch 16 million square feet by this year-end. Growth of e-commerce is tapering down from 3 per cent in the last year to a mere 1 per cent in first quarter of 2024. This is because smaller companies are outsourcing logistics to third party logistics players (3PL) and optimising white spaces in existing warehouses, which has been their focus.
Crucial pain points
Acquisitions: Land acquisition challenges have been hitting the warehousing sector hard as getting the right parcel of land in the right location is tough. In Indian cities such as Mumbai, Pune Bengaluru, and Chennai, the warehousing vacancies have reached an all-time low.
