India's Grade A warehousing market witnessed a remarkable boom in 2024, driven by robust demand from the logistics and industrial sectors. A report by CREDAI and CRE Matrix revealed that leasing of premium warehousing spaces was set to exceed 45 million square feet, with H1 2024 witnessing a strong uptake of 20.3 million square feet.
This robust demand significantly outpaced new supply, which stood at 14.8 million square feet, resulting in a record-low vacancy rate of 8.2%. Key regions like the MMR, Pune, and NCR led the charge, collectively accounting for 64% of the total demand. Regional trends were evident, with Bengaluru witnessing a 25% increase in Grade A supply in Q2 2024, a first for the city. Pune emerged as a hotspot, contributing significantly to overall demand, with a demand-to-supply ratio reaching 2x, indicating a strong potential for future development. Chennai also demonstrated strong growth with a demand-to-supply ratio of 1.6x.
This surging demand led to a 4% year-on-year increase in warehousing rental rates. Third-party logistics, manufacturing, and electronics sectors were the primary drivers of demand for Grade A spaces. With India's Grade A warehousing stock projected to surpass 300 MSF by 2025, the future of the sector appears promising.
“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,” said Boman Irani, president, CREDAI.
