-         Grade A warehouse absorptionrose from 34 mn.sq.ft. in 2018 to 48.5 mn.sq.ft in 2021 at a CAGR of 12.6 percent; Supply up from 37.8 mn.sq.ft. to 51 mn.sq.ft in the same period at CAGRof 10.6 per cent.

-         Grade A warehouse leasingacross seven cities at approximately 160+ mn.sq.ft. Highest in West (MMR andPune) with 37 per cent, followed by South (Bangalore, Chennai, and Hyderabad)with 32 per cent.

-         Among top seven cities, MMR hasthe highest average rent at `27/sq.ft.; Hyderabad lowest at `20/sq.ft.

-         Of top 10 micro markets,Western region (Bhiwandi, Chakan, and Panvel/Taloja) dominates Grade Awarehousing space leasing share with 41 per cent.

India will needto create adequate supply to meet absorption of approximately 223 mn.sq.ft.of Grade A warehousing demand over the next three years, finds a recent CREDAI-ANAROCKreport 'India Warehousing – A Sunrise Sector'. An equity investment of around$3.8-bn will be required to support this scale of development.

Shobhit Agarwal,MD and CEO – ANAROCK Capital, says “Based on the data, the sector currently has'dry powder' funding of $900-mn from existing commitments. This signifiesa latent investment opportunity of further $2.8-bn in the warehousing sector inthe near future. Much of this funding will need to target Grade A warehousingfacilities, which is witnessing increasing demand due to its direct andindirect beneficial impacts on overall operational efficiencies.”

The absorptionof Grade A warehousing increased from 34 mn.sq.ft in 2018 to 48.5 mn.sq.ft in2021 at a CAGR of 12.6 per cent, states the report. Meanwhile, supply in thiscategory rose from 37.8 mn. sq.ft to 51 mn.sq.ft in the same period at a CAGRof 10.6 per cent.

The top sevenIndian cities witnessed approximately 160+ mn.sq.ft of Grade A warehouseleasing and was highest in the Western markets of MMR and Pune, followed by theprimary Southern markets of Bangalore, Chennai, and Hyderabad, which togethersaw 32 per cent of the overall leasing volumes.

Top 10 Leasing Micro-Markets

HarshVardhan Patodia, President – CREDAI, and CMD, Unimark Group, says,“Warehousing has emerged as one of the most preferred asset classes forinvestors and developers to balance their real estate portfolios. Thewarehousing segment is range bound and a high revenue generator. While the IRRis higher, the risk is lower, and production is faster. Moreover, this sectoris consumption-led, unlike other sectors which a primarily developer-led.”

Warehousing key PE investment deals and JV Platforms

Warehousing Rentals

Among the top sevencities, MMR has the highest average rent at `27/sq.ft.,and Hyderabad lowest at `20/sq.ft. Of top 10 micro markets, the Western markets of Bhiwandi,Chakan, and Panvel/Taloja dominate Grade A warehousing space leasing sharewith 41 per cent.

Sectors driving Warehousing demand

The top threesectors – 3PL, E-commerce, and Manufacturing and Automotive – account for a 78per cent share of warehouse leasing space across seven cities. 3PL has thehighest leasing space share at 42 per cent, given the upsurge in companiesdeploying their supply chain and logistics function to 3PL players.

Warehousing Outlook

Investors – both,foreign and domestic – can expect an entry yield of 9-10 per cent, notes thereport. Going forward, many international developer funds are expected to enterIndian Warehousing space. So far, the warehousing development was led by funds –the next round of funding will be led by JV platform deals.

Also, awarehouse sector-specific REIT/ InVIT is expected to be announced in2024.

There is also alarge scope for air cargo, cold-chain structures, and in-city multi-levelstructure warehouse development. ESG too is expected to become an integralfactor as ESG standards-compliant projects see easier planning process, tenantretention, and investor trust.