Annual warehousing transactions in the primary markets will increase at a compound annual growth rate of 19% to 76.2 million sq ft by FY26 from 31.7 million sq ft in FY21, according to a recent report by Knight Frank titled ‘India Warehousing Market Report 2021’.
A recent report by Savills India also shows that the leasing of industrial and warehousing spaces across 8 major cities increased by 35% during 2021, wherein the fresh supply increased by 64%. With such a great expansion, the sector has established itself as one of the most resilient asset classes that continues to bring important capital.
The pandemic has certainly played a key catalytic role in promoting the logistics industry. With a drastic shift toward digitisation and contactless operations, customers that traditionally worked offline went online. This resulted in a great explosion of D2C brands aiming to get the very best of their products directly to the customers’ doorstep.
This further highlighted the importance of smoothening the whole supply chain of doorstep delivery. Also, the increased requirement for oxygen cylinders, essential supplies, vaccines, food, etc made quick and timely distribution a focus.
There was a major boom in the e-commerce sector. It accelerated the speed of the industry to satisfy the consumers’ needs for increased home shopping demands and shed light on the significance of last-mile delivery.
Grade-A warehouses appeared as the one-stop solution, and their demand saw a major uptick. The Savills report also validates this by showing that the warehousing demand in 2021 was driven by e-commerce firms and third-party logistics players for 62% of the total absorption, followed by the manufacturing sector at 14%. Grade-A warehouses are gigantic spaces that allow storing, promote efficient operations of the supply chain of any business, and are made with modern amenities, state-of-the-art infrastructure & technology to provide competencies.
Moreover, with limited space within the existing parks, businesses are often compelled to settle for alternate areas, far from the city.