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India's warehousing stock grows at 25% YoY: JLL report

04
Feb '20

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The Indian warehousing sector has shown a robust growth of 25 per cent year on year (YoY), with the total warehousing space at 211 million sq ft at the end of last year compared to 169 million sq ft in 2018, according to JLL. The total warehousing stock of India is expected to cross 375 million sq ft by 2023 with an increased share of grade A stocks, it said.

Strong demand is expected to drive the market absorption and keep the vacancy below 10 per cent, said the Chicago-based a professional services firm that specialises in real estate and investment management in a press release.

In a new report by JLL India Industrial Services, 2019 witnessed a 15 per cent YoY growth in total net absorption in grade A and B warehousing space in top eight cities.

The Delhi National Capital Region (NCR) region, Mumbai and Bengaluru remained the top three cities in terms of warehouse space absorption in 2019. These three cities together account for more than 20 million sq ft of absorption. Other cities like Kolkata, Chennai and Pune also continued a strong show.

The market has also witnessed 3PL (third party logistics) emerging as the largest occupier of space as the sector received two pronged growth: one from the sector’s self-expansion and other from demands transcending form other sectors who are shifting to asset or less liability or asset light model of leases through 3PL players.

Given that transportation contributes to a significant operation cost of logistics, if the infrastructure challenges are addressed, India’s logistics and warehousing sector will see significant growth, and foreign capital will remain an integral part of this, the report said.

Larger funds and developers willing to create a mark in the bigger spectrum of Indian warehousing are evaluating regional developments having strong tenant profile with a combination of land and stabilised assets.

It provides them with the opportunity of having a stable source of financials from the existing occupiers while they are also able to build and create inventory in future years catering to the upcoming demand, the report added.

Fibre2Fashion News Desk (DS)

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