Indian warehouse stock at over 380 million sq. ft by 2024: JLL

• The total stock of Grade A & B warehousing space in the top 8 cities[1]  increased at CAGR 16% from 2018 to YTD 2021 (till Q3, 2021)’.
• Gross Absorption[2] in YTD 2021 (till Q3) stands at a strong 26.6 million sq. ft.
• Consistently decreasing India Grade A vacancy level (YTD 2021 till Q3) at 10.5%

Mumbai, November 29, 2021: With COVID-19 came the paradigm shift in consumer behavior from offline to online shopping, leading to an increased activity in sectors like e-commerce and 3PL/logistics. This has paved way for an emerging focus on new warehousing and logistics requirements especially in urban settings. The Indian warehouse stock is expected to reach over 380 million sq. ft by 2024, according to JLL.

Recovering well 

About 27 sq. ft. of warehousing stock was added in first nine months (Jan-Sept) of 2021, bringing total stock to 265 million sq. ft. in 2021. The total stock of Grade A & B warehousing space in the top 8 cities increased at CAGR 16% from 2018 to YTD 2021 (till Q3, 2021).

New supply driven by growing demand for grade A spaces

“Growth in supply of Grade A spaces over the years is due to high demand for spaces with high specifications, citing increased inclination for high-grade structures and introduction of new players in the market. The Indian market has now firmly established itself for a more predominant position in Grade A space as opposed to Grade B spaces,” said Yogesh Shevade, Head – Logistics & Industrial, India, JLL. 

Strong revival in warehouse net absorption[3]

Net absorption was impacted in 2020 but started recovering in 2021 especially for Grade A spaces, from 56% in 2020 to 73% in 2021. This shift is due to the high demand for quality spaces complying with COVID-19 norms. Moreover, as per the findings of JLL Logistics & Industrial, warehouse Gross Absorption[4] in YTD 2021 (till Q3) stands at 26.6 million sq. ft. which includes net absorption of 19.7 million sq. ft as well as instances of churning and renewals. 

The research suggests that of the total absorptions of YTD 2021 (till Q3), more than half the share is taken up by 3PL/Logistics and e-commerce (55%), due to shift of consumer behavior towards online shopping (including online grocery shopping during COVID-19.

The sector continues to attract investments from institutional players

There has been a continuous flow of investments in the sector from institutional funds and private equity investors despite the economic headwinds due to the COVID-19 pandemic. Ongoing structural changes to asset allocations and operations of logistics real estate and supply chain networks have converged to accelerate investment into the sector. Strong underlying market fundamentals, with emerging trends underpins a strong outlook for the sector. 

[1] Top 8 Cities include Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, NCR, Pune

2 Gross Absorption is all transactions that happened in the market including renewals and churning

3 Net Absorption is the warehouse space occupied excluding renewals and churning

4 Gross Absorption is all transactions that happened in the market including renewals and churning

Corporate Comm India(CCI Newswire)