India’s Warehousing Sector Witnesses 15% YoY Growth: JLL Report

In a recent report titled ‘Exploring India’s thriving logistics and warehousing landscape’ by JLL, the warehousing sector in India demonstrated remarkable growth in 2023, with a 15% year-on-year increase in total stock of Grade A and B spaces across eight major cities. The cumulative warehousing space reached 371 million sq ft by the end of the year, showing a significant rise from 329 million sq ft in the previous year.

Yogesh Shevade, Head of Logistics & Industrial at JLL, noted, “The Indian warehousing sector has been on an exceptional growth trajectory since 2017.” He attributed this growth to a 15% YoY increase in total warehousing stock, reaching 371 million sq ft. The sector experienced a net demand of approximately 40 million square feet in the same period, with 70% of this demand being accounted for by Grade A spaces. Shevade emphasized the shift towards quality facilities to meet the evolving demand for efficient logistics and supply chain solutions.

The report highlighted that more than half of the warehousing stock in the eight major cities was contributed by Delhi NCR, Mumbai, and Bengaluru. Pune led in net absorption with 8 million sq ft, driven by growing manufacturing demand supported by government initiatives like Make in India and Production-Linked Incentives Schemes. Mumbai and Delhi NCR closely followed, with a net absorption of around 7 million sq ft each.

The overall vacancy rate in the market experienced a marginal dip, reaching 15% in 2023, and is expected to decrease further to 8% by 2027. Grade A vacancy witnessed a significant decrease from 7% in 2022 to 5% in 2023, projected to remain below 5% in 2027 due to strong demand for quality and compliant spaces.

Rent trends showed an upward correction in 2022 and 2023 after a period of slow growth in the past five years, attributed to increasing land prices and construction costs. Overall rent increased with a 6% YoY growth rate from 2021 to 2023.

While 3PL/logistics remained the largest segment based on warehousing space demand, manufacturing sectors, including engineering and auto, experienced significant demand in 2023 as manufacturing rebounded post-COVID lockdown. The retail and FMCG sectors continued to show consistent demand, and e-commerce gained traction due to a shift in consumer behavior from offline to online purchases.

As the Indian economy rebounds from the pandemic, the logistics and warehousing industry is poised for robust growth driven by evolving consumer demand, the expanding presence of 3PL companies, and increased traction in manufacturing sectors. The report projects a CAGR of 12% for total warehouse stock in India, reaching 595 million sq-ft by 2027, with Grade A stock expected to witness a CAGR of 16%, reaching 345 million sq-ft. Grade A vacancy rates are predicted to steadily decline to less than 5% in the next three years.

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