Warehousing market set to see highest net absorption

Hyderabad: Demand for warehouses has seen a healthy incline in India and projections till December 2022 indicate a record net absorption of 42.5 million sq ft in 2022 as against 39 million sq ft.in 2021.3PL/ logistics has remained the largest sector in terms of warehousing demand over the years, JLL report.

Sanjay Bajaj, MD (Logistics and Industrial) India, JLL, said: "We have seen a large amount of private equity/ Indian corporate developers focusing on this sector. Theywish to build compliant, sustainable, and technologically advanced industrial parks for occupants. In terms of the warehousing sector, we havewitnessed unprecedented growth driven by 3PL/ logistics players, retail, and e-commerce in Tier I aswell as Tier II cities. The average sizes of Grade-A warehouses have increased by 2x from 80,000 sq. ft.in 2016 to 160,000 sq. ft. in H1 2022."

According to the JLL report 'India Warehousing Market: Present and Future,' Grade A stock in Indiafor the year 2021 was at 134 million sq ft. translating to a three-year CAGR of 27 per cent.With rising disposable incomes and consumption-led demand, retail demand expanded strongly in H12022. Engineering and auto and ancillaries are the other main drivers of demand in H1 2022, sincemanufacturing companies have been incentivized with favourable government policies to attract MNCsas well as domestic investments.

The shift towards sophisticated,cutting-edge storage systems has resulted in a two-fold increase in the average size of Grade-A warehouses inIndia. The average volume of Grade A warehouseshas grown by 3x over the past 5 years.The industrial and warehousing sector has recovered very sharply since Covid-19, the reasons for thesharp recovery being – India is in a more favourable position given the changing global supply chaindynamics, strong government policies, and strong domestic demand.

The rent index inH1 2022 observed a significant jump reaching 129. With the increasing demand in the market, there is a significant dip in overall vacancy to reach 11.4 per cent inH1 2022. The Grade A vacancy has also reached 7.7 per cent in H1 2022 and is projected to reduce further in2025.