Following this, the Indian warehouse stock is expected to reach over 380 million sq ft by 2024 after adding around 27 million sq ft in the first nine months until September end, bringing total stock to 265 million sq. ft. in 2021, said JLL India.
The total stock of Grade A & B warehousing space in the top 8 cities increased at compound annual growth rate (CAGR) of 16% from 2018 to 2021 September end.
“Growth in supply of grade A spaces over the years is due to high demand for spaces with high specifications, citing increased inclination for high-grade structures and introduction of new players in the market. The Indian market has now firmly established itself for a more predominant position in Grade A space as opposed to Grade B spaces,” said Yogesh Shevade, Head – Logistics & Industrial, India, JLL.
Net absorption of warehousing space was impacted in 2020 but started recovering in 2021 especially for grade A spaces, from 56% in 2020 to 73% in 2021. This shift is due to the high demand for quality spaces complying with Covid19 norms. Warehouse gross absorption until September stood at 26.6 million sq ft, including net absorption of 19.7 million sq ft and instances of churning and renewals.
Of the total absorptions until September end, 55% is taken up by 3PL/Logistics and e-commerce due to shift of consumer behavior towards online shopping including online grocery shopping during Covid19.
There has been a continuous flow of investments in the sector from institutional funds and private equity investors despite the economic headwinds due to the Covid19 pandemic.
Ongoing structural changes to asset allocations and operations of logistics real estate and supply chain networks have converged to accelerate investment into the sector. Strong underlying market fundamentals, with emerging trends underpins a strong outlook for the sector.