The first quarter of calendar year 2024 witnessed a notable surge in the addition of Grade A industrial and warehousing space, with the National Capital Region (NCR) emerging as the frontrunner, according to a comprehensive report unveiled by property consultancy Colliers.
An impressive 2.3 million square feet of fresh warehousing space bolstered NCR’s position, elevating the region’s overall supply to nearly 7 million square feet across the top-5 markets. This surge in supply corresponded with a matching gross absorption rate of 7 million square feet within the segment during the January-March period, as highlighted by the report. However, despite the robust supply influx, vacancy levels in the industrial and warehousing sector witnessed a quarter-on-quarter increase of 120 basis points, reaching 11 percent. The uptick in vacancies was attributed to churn and exits within the segment, underscoring the dynamic nature of the warehousing landscape. Driving demand were third-party logistics players, commanding over 40 percent of the total warehousing space uptake during the quarter. Notably, the cumulative share of retail, engineering, and automobile players surged to 40 percent, marking a significant uptick from 26 percent recorded in the corresponding quarter of 2023.
The report also shed light on the robust growth exhibited by the e-commerce segment post the Covid-19 pandemic, with leasing activity witnessing a remarkable 2.3 times increase during Q1 2024 compared to the same period last year. Anticipating continued growth, the report highlighted the likelihood of increased demand for warehouses, driven by the focus on digital infrastructure and evolving consumption patterns. Moreover, the rise of quick commerce players is poised to further catalyse demand for larger hub-warehouses, presenting lucrative opportunities for the warehousing sector. Geographically, Chennai emerged as a standout performer, recording a nearly twofold increase in space take-up during the first quarter compared to the corresponding period in 2023. Meanwhile, Bhiwandi in Mumbai retained its status as the most active market, witnessing robust demand with 1.7 million square feet of Grade A warehousing uptake in Q1 2024. The report underscores the evolving dynamics of India’s warehousing sector, with NCR leading the charge in fresh supply addition amidst shifting demand trends and geographical nuances.
