Indian Grade A Warehousing Leasing Set to Cross 45 Million Square Feet in 2024: CREDAI - CRE Matrix Report

- Warehouse Leasing reached 20.3 MSF in the first half of 2024 and is poised to reach 25 MSF in H2 2024

4^th October, 2024 - India’s Grade A warehousing market is witnessing an unprecedented boom, with record-high demand reflecting the growing strength of the country’s logistics and industrial sectors. According to a report by CREDAI and CRE Matrix, leasing of premium warehousing spaces is set to cross 45 Million Square Feet in 2024, with H1 2024 clocking 20.3 MSF and H2 2024 projected to cross 25 MSF.

The report also revealed that the warehousing demand/ leasing of 20.3 MSF in H1 2024 far surpassed new supply, which stood at 14.8 MSF. The segment also recorded the lowest ever vacancy rate of 8.2% - demonstrating the industry's sharp trajectory. The rapid growth is driven primarily by key regions such as the Mumbai Metropolitan Region (MMR), Pune, and NCR, which collectively account for 64% of the total demand.

The report underscored the prevalence of regional trends, such as a 25% increase in Grade A supply in Bengaluru between Q1 and Q2 2024 - first ever such a steep rise in Bengaluru - showcasing the steady growth of warehousing infrastructure in the city. Pune has seen extremely high demand for Grade A warehousing space, contributing significantly to overall demand in the market. In H1 2024, Pune alone accounted for 48% of the total demand registered in the MMR-Pune region. Despite a surge in demand, Pune faces a supply shortage, with the demand-to-supply ratio hitting 2x, indicating the potential for significant new development in the coming quarters. Similarly, Chennai registered a demand-to-supply ratio of 1.6x, highlighting the increasing attractiveness of its logistics infrastructure. With a vacancy rate of just 7.4%, the city is poised to maintain its upward trajectory as more industries look to establish a presence in this vital southern market. This also indicates the region's emerging role as a logistics and manufacturing hub.

Due to the aforementioned gap between the burgeoning demand for high-quality warehousing, the warehousing rental rates in H1 2024 also increased at 4% YoY, across the country. The persistent demand is primarily driven by Third-party logistics, Manufacturing, and Electronics sectors accounting for nearly two-thirds of the demand for Grade A spaces. India’s Grade A warehousing stock is projected to surpass 300 MSF by 2025 - which currently stands at 238.5 MSF, providing a promising outlook for stakeholders.

Boman Irani, President, CREDAI, said “The Indian Real Estate market is evolving rapidly, with specialized segments like warehousing complementing the robust growth of the more traditional segments. Cities like Pune and MMR have emerged as critical industrial hubs, accounting for nearly 50% of the Grade A warehousing demand. As these regions continue to develop - with increased investments, the establishment of new manufacturing units, and the rise of e-commerce, we foresee sustained momentum in demand going into Q4 2024 and the new year - underscoring the untapped potential and strategic opportunity for developers and investors alike.”

Abhishek Kiran Gupta, Co-founder and CEO, CRE Matrix, said “India’s position in the Global landscape is extremely unique – Global Manufacturers are either shifting from China or expanding into India and on the other side, we are seeing a massive expansion of E-commerce and 3PL based on the consumption patterns in tier-I and tier-II cities of India. The India advantage of low wages, technology push in manufacturing coupled with ease of doing business will be the driving factors over the next few years as we leapfrog to 300 msf stock by 2025-end.