{"id":445,"date":"2024-01-30T08:06:55","date_gmt":"2024-01-30T08:06:55","guid":{"rendered":"https:\/\/www.floortap.com\/resources\/?p=445"},"modified":"2024-01-30T08:10:30","modified_gmt":"2024-01-30T08:10:30","slug":"indias-warehousing-sector-overtakes-office-space-demand-in-2023","status":"publish","type":"post","link":"https:\/\/www.floortap.com\/resources\/indias-warehousing-sector-overtakes-office-space-demand-in-2023\/","title":{"rendered":"India’s Warehousing Sector Overtakes Office Space Demand in 2023"},"content":{"rendered":"\n
The warehousing sector of India has achieved a unique feat \u2013 it has surpassed office space demand in 2023 by 3.5% despite being 25 years younger than the office segment. This can be attributed to India\u2019s consumption being driven across all income segments, PLI scheme being extended to 14 sectors, coupled with fast-paced improvements in infrastructure. Demand still continues to surpass supply in this segment and as a result, rentals have increased by 8.3% in Q3 CY\u201923 vs the same quarter last year. With the current pace of economic growth, we believe CY 2023 will end up with 65 – 70 msf demand for warehousing space on a pan-India basis, across all grades.<\/p>\n\n\n\n
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Across all grades, warehousing space demand in India has surpassed office space demand by 3.5% over the last 9 months.<\/li>\n\n\n\n
1.3% Decline in Grade A\/A+ vacancy levels of Warehousing across top 6-cities in Q3 CY\u201923 vs Q3 CY\u201922.<\/li>\n\n\n\n
8.3% Increase in Grade A\/A+ market rents in Q3 CY\u201923 over the last 9 months on a Pan-India basis.<\/li>\n\n\n\n
53% Contribution of NCR & Pune to PanIndia Grade A\/A+ warehousing demand in first 9 Months of CY\u201923.<\/li>\n\n\n\n
The Manufacturing Sector was the highest contributor to warehousing demand in 9M CY\u201923 \u2013 contributing 28% to overall leasing.<\/li>\n\n\n\n
65-70 msf Predicted pan-India warehousing demand for the full year 2023.<\/li>\n<\/ul>\n\n\n\n<\/figure>\n\n\n\n<\/figure>\n\n\n\n<\/figure>\n\n\n\n<\/figure>\n\n\n\n
The Indian warehousing demand has successfully surpassed office space demand in 2023 by 3.5% in the first 9 months – despite being 25 years newer compared to the office segment, according to a joint report unveiled by CREDAI and CRE Matrix. The growth signifies the\u00a0emergence of new real estate segments that are driving sectoral growth, while also signifying progress of other industries that have given rise to the warehousing industry in particular. The report further highlights that the demand will continue to surpass supply in this segment and as a result, rentals increased by 8.3% in Q3 CY\u201923 as compared to the same quarter of the previous year. According to the report, CY 2023 will close with warehousing demand in the region of 65-70 MSF in India, across all grades.<\/p>\n\n\n\n
The nationwide study by CREDAI and CRE Matrix, which has analyzed the warehousing segment across key markets including Delhi-NCR, MMR, Pune, Bangalore, Chennai, and Hyderabad, showcased that the National Capital Region (NCR) and Pune together contributed to 53% of the warehousing demand in the first 9 months of CY\u201923 and were responsible for contributing 57% of the total supply. The highest demand, which is over 28% in the same period, has been generated by the manufacturing sector, owing to the central Production Linked Incentives (PLI) scheme that has now been spread across 14 sectors.<\/p>\n\n\n\n
The rental costs, too, have witnessed an 8.3% surge pan-India in the first 9 months across Grade A spaces, with NCR observing a 12% increase in rent over the last 12 months, making it the highest rise across all cities in the same period. Some of the leading industries across the country to have leased warehousing spaces include players from Third-Party Logistics (29%), Manufacturing (19%), and Retail (14%), among others.<\/p>\n\n\n\n
CREDAI President, Boman Irani, says, \u201cThe rise of new segments such as Warehousing is not just validation of the rapidly growing real estate sector but also the Indian economy as a whole. The fact that such a young segment has clocked in such remarkable demand-supply numbers is a reflection of the significant rise in economic activities of the country and expansion of global companies in India, as our country continues on its path to become a global hub for manufacturing and servicing industries. Coupled with the increased buying appetite of a young and thriving population, we expect this sectoral and economic momentum to continue in 2024 wherein industries such as E-commerce, Logistics, and other industries are projected to drive more demand for Grade A warehouses across India.\u201d<\/p>\n\n\n\n
Abhishek Kiran Gupta, CEO, CRE Matrix, says, \u201cLeasing Demand for Grade A & Grade B warehouses surpassed 50 MSF in Jan-Sep\u201923 period and is expected to be about 70 MSF for CY\u201923, higher than Grade A office leasing demand for CY\u201923. The four sectors playing a big role here – 3PL, Manufacturing, E-commerce, and Automobiles. 3PL and Manufacturing have both significantly contributed to this demand, clocking around 26% and 21%, respectively in the last 2-3 years. As our consumption economy booms further in line with our growth targets, and massive infrastructure projects get completed, along with initiatives such as India\u2019s Gati Shakti plan, I am sure Warehousing demand will rise further. The current Grade A occupied warehousing stock in India is about 200Mn sqft. We foresee this occupied Grade A warehousing stock to double to 400Mn sqft over the next 4 years.<\/p>\n\n\n\n
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