The 3PL sector played a significant role, driving demand with a 33% share, followed by the manufacturing sector at 22% and the FMCG/FMCD sector at 17%. Notably, the uptake of manufacturing warehouses significantly contributed to the overall absorption. Tier I cities captured a dominant share of the absorption (78%), while Tier II and III cities accounted for the remaining 22%. The report further indicates that the sector witnessed a supply addition of 28.2 million square feet in the first half of 2024, with 77% concentrated in Tier I cities and the remaining 23% in Tier II and III cities.

Absorption (mn sq. ft) across cities

Note: Tier I cities include Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, Delhi-NCR, and Pune. Tier II and Tier III cities include Guwahati, Bhubaneshwar, Patna, Hosur, Coimbatore, Rajpura, Lucknow, Jaipur, Nagpur, Surat, Indore, Kochi, Hubli, Vizag, Belgaum and Anantapur.

Supply (mn sq. ft) across cities

“The industrial and logistics sector is poised for significant expansion, driven by a robust demand landscape and bolstered by strategic government initiatives such as PLI & FDI Policies, PPP Models of various Public Sector Undertakings, The East Coast Economic Corridor (ECEC) and India Middle East Economic Corridor (IMEC), etc. This growth is substantiated by notable year-over-year increases, reaffirming the sector’s pivotal role in fostering economic vitality. Concurrently, the e-commerce sector is set to surge further as it adopts new models to expand urban distribution and extend its footprint into tier-II & III locations. Moreover, strong domestic consumption driving reduction of dependency on imports is increasing more & more manufacturing investments into multiple sectors and initiatives like the National Logistics Policy highlight substantial long-term growth opportunities, facilitating rapid technology adoption amidst evolving supply-chain dynamics.” – Srinivas N, Managing Director, Industrial and Logistics, Savills India.

Grade Wise Supply (%)

Grade wise absorption (%)

While the first half of 2024 saw a slight dip in the share of Grade-A space in both supply (49% down from 52% in H1 2023) and absorption (39% down from 53% in H1 2023), this is considered temporary. The growing focus on Environmental, Social, and Governance (ESG) standards among occupiers is expected to significantly boost demand for Grade-A space in the future. By the end of 2024, the contribution of Grade-A space to both overall supply and absorption is projected to exceed 60%.

Sector wise absorption (%)

Note: Other Sectors include space take-up by Cold Storage, Chemicals, FTWZs, ICDs, Agriculture Warehousing, Self-storage and Manufacturing Storage.

In H1 2024, 3PL sector accounting for 33% to total absorption witnessed in the country down from 44% of total absorption witnessed in H1 2023. This decline was attributed to reduced supply chain outsourcing to 3PL partners by FMCG/FMCD companies to reduce operational costs. As a result, the FMCG/FMCD sector contribution to overall absorption increased to 17% in H1 2024 from 6% of the total absorption in H1 2023. In addition, the demand for warehousing space by FMCG and FMCD occupiers is on the rise due to improved demand for FMCG and FMCD products in tier I, II, and III cities, as well as improved demand in rural markets.

The E-Commerce is also likely to witness a continued surge, it is adopting new business models for increasing urban distribution and extending the reach in tier-II & III locations. The growth in cities like Patna, Ranchi, Lucknow, Guwahati, Rajpura, Ambala, etc., has been remarkable.

The manufacturing sector’s contribution to overall absorption experienced impressive growth, increasing from 16% of total space absorption in 2022 to 22% in H1 2024. The sector has gained momentum with a host of incentive schemes, including the Production Linked Incentive Scheme (PLI).

The retail sector accounted for 7% of the overall absorption in H1 2024. The other sectors including cold storage, chemical storage, FTWZs, ICDs, and Urban Warehousing contribution was around 15% during the same period.

City wise Absorption (%)

Among the major cities in India, Delhi NCR led the pack with the highest absorption in H1 2024 at 20% followed by Pune at 12%, Bangalore at 11%, while tier II & tier III cities accounted for 22% of overall absorption.  In terms of supply, Delhi NCR accounted for the highest contribution of 17% in H1 2024, followed by Chennai at 13%, Bangalore at 12%, Pune & Mumbai each at 11% and tier II & III cities together accounted for 23% of the total supply witnessed in H1 2024.

Also Read: India’s Data Centre boom to drive 10 million sq. ft. real estate demand

The post Industrial & Warehousing sector records 21.9% annual demand growth in H1 2024 appeared first on Square Feat India.

The sector received investments worth USD 646 Mn in 2023, accounting for 15% of the total institutional investment received in the real estate sector. However, investments declined by 65% in 2023 over the previous year as investors opted for wait-and-watch mode amid global macroeconomic uncertainty.

Yearly Absorption Trend

In the past decade, 3PL companies emerged as a preferred choice for several businesses as these companies can optimize cost along with providing flexibility to their clients in case of demand uncertainty. As a result, the share of 3PL companies increased over the years and reached 44% of the overall absorption in 2023, followed by Engineering and Manufacturing companies with 18% share. Retail accounted for 11% of the overall absorption in 2023.

Sector-Wise Absorption (Mn sq ft)

Mumbai contributed the highest to the overall absorption in 2023 with 27% share. Its share has increased from 19% a year earlier. In absolute terms, absorption increased by 69% in the city, reaching 10.2 Mn sq ft in 2023. Heightened real estate activities during the year resulted in an annual appreciation of 4% in rentals.

On the other hand, Kolkata witnessed the highest annual decline of 23%, reaching 1.6 Mn sq ft in 2023. Its share has also declined from 7% in 2022 to 4% in 2023. Limited availability of Grade A warehouses in the city posed a challenge in meeting growing demand, leading to a decrease in absorption. Moreover, restricted absorption activities in the city during 2023 exerted pressure on rentals, resulting in an annual decline of 5%.

Absorption increased by 21% in NCR compared to the previous year, however, its share in the total absorption remained constant. The city’s strategic location and thriving e-commerce markets were major demand drivers. Robust demand for warehouses in the city resulted in an annual appreciation of 2% in rentals.

Pune registered a substantial annual growth of 35% in 2023, reaching an absorption of 7.0 Mn sq ft. This growth can be attributed to the presence of trade hub of Chakan MIDC, which hosts large manufacturing and logistics parks.

The southern cities (Bengaluru, Chennai, and Hyderabad) collectively contributed 27% to the total absorption in 2023, after reporting a decline from 34% share in 2022. In absolute terms, absorption decreased by 5% in these cities, reaching 10.2 Mn sq ft in 2023.

Shrinivas Rao, FRICS, CEO, Vestian said, “The Union Budget 2024-25 is expected to set the tone for next couple of years. Recent announcements of infrastructure development in the interim budget may have a positive impact on the sector. However, 2024 can be a challenging year for Indian warehousing sector as investments were on a downward trend in 2023.”

The sector is expected to expand at a CAGR of 10%-13% for next couple of years, predominated by third-party logistics and e-commerce enterprises. Grade A facilities are likely to be in demand due to their efficient and cost-effective methods.

Also Read: Industrial & Warehousing demand consolidates in 2023, at about 25 mn sq ft

The post Warehousing & Logistics sector shows resilience amidst Investment drought  appeared first on Square Feat India.

Multiple logistics parks sprung up in this area over a period of time and there are many big logistics firms who have rented properties here.

One such rental deal took place in Bhiwandi recently when 20cube Logistics Solution rented a 5.4 lac sq ft area.

According to documents accessed by SquareFeatIndia, provided by Propstack the deal was signed for a period of 60 months.

The lease commenced on June 1, 2023, and will end on May 31, 2028.

The owner is RKJ Shakti Logistic Park, the property rented is in Shakti Logistic Park, Bhiwandi.

The monthly rent is 84.75 Lac, the security deposit is ₹2.48 crore.

The rent escalation is 4.5% every yer.

Also Read: Mahindra Logistics leases 6.53 lac Sq Ft Warehouse in Bhiwandi

The post Bhiwandi: Logistic firm Rents Property for ₹85 lac a month appeared first on Square Feat India.

Bhiwandi, a small town within the Thane district has seen numerous warehouse deals in the last few months. It wouldn’t be wrong to call it as the Warehouse Capital of Maharashtra.

Bhiwandi me proximity to Mumbai and all these warehouses being located on the main Mumbai-Nagpur Samriddhi Mahamarg is attracting more and more logistic firms. Mahindra being an add on to the list of A list Logistics firms that operate in the country.

According to documents provided to SquareFeatIndia by CRE Matrix, a real estate data analytics firm, the deal was signed between RKJ Shakti Logistics Park LLP as the licensor and Mahindra Logistics Ltd as the licensee.

The property detail includes Warehouse K8, Shakti Logistics Park, Village Dohale, Taluka Bhiwandi,

The lease deal was signed on December 27, for a starting monthly rent of ₹94.05 lakh.
The Lease Period is 60 Months and the Rent Escalation is 4.5% at the end of every 12 months.

The parking area is Parking Area in the warehouse is 97,068 sq ft. The security deposit paid for the lease is ₹2.82 crore.

Also Read: Bhiwandi: Damco leases 2.43 lac Sq Ft for ₹47.62 lac per month rent

The post Mahindra Logistics leases 6.53 lac Sq Ft Warehouse in Bhiwandi appeared first on Square Feat India.

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

The absorption of Grade A warehousing increased from 34 Mn sq. ft in 2018 to 48.5 Mn sq. ft in 2021 at a CAGR of 12.6%, states the report. Meanwhile, supply in this category rose from 37.8 Mn sq. ft to 51 Mn sq. ft in the same period at a CAGR of 10.6%.

The top 7 Indian cities witnessed approx. 160+ Mn sq. ft of Grade A warehouse leasing and was highest in the Western markets of MMR and Pune, followed by the primary Southern markets of Bangalore, Chennai and Hyderabad, which together saw 32% of the overall leasing volumes.

Top 10 Leasing Micro-Markets

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

Warehousing Key PE Investment Deals & JV Platforms

Warehousing Rentals

Among the top 7 cities, MMR has the highest average rent at INR 27/sq. ft., and Hyderabad lowest at INR 20/sq.ft. Of top 10 micro markets, the Western markets of Bhiwandi, Chakan and Panvel/Taloja) dominate Grade A warehousing space leasing share with 41%.

Sectors Driving Warehousing Demand

The top 3 sectors – 3PL, E-commerce, and Manufacturing and Automotive account for a 78% share of warehouse leasing space across 7 cities. 3PL has the highest leasing space share at 42%, given the upsurge in companies deploying their supply chain and logistics function to 3PL players.

Warehousing Outlook

• Investors – both foreign and domestic – can expect an entry yield of 9-10%
• Going forward, many international developer funds are expected to enter Indian Warehousing space.
• So far, the warehousing development were led by funds – the next round of funding will be led by JV platform deals
• A warehouse sector-specific REIT/ InVIT expected to be announced in 2024
• Large scope for air cargo, cold-chain structures and in-city multi-level structure warehouse development
• ESG to become an integral factor as ESG standards-compliant projects see easier planning process, tenant retention and investor trust

Also Read: Bhiwandi Warehouse with 343 Parking leased at Rs 1.62 Cr per month

The post $3.8 Bn Funding Needed to Meet India’s 223 Mn sq. ft. Warehousing Demand in Next 3 Years appeared first on Square Feat India.

The monthly rent is inclusive of CAM charges which stands at Rs 1.62 crore and the chargeable area is 6,28,713 sq ft.

According to documents provided to SquareFeatIndia by CRE Matrix, a real estate data analytics firm the deal was signed on October 20.

The premises that has been rented is Warehouse Block No. N4, Welspun One Logistic Park, Bhiwandi, in Thane dsitrict.

Along with the premises the Lessee will also have an access to 343 parking, this comprises of 15 cars park, 278 bike parks and 50 truck parks.

The lease period is for 18 years, the lock-in period is for 48 months, rental escalation is 5% every year. The dedicated parking area is 69,774 sq. ft.

“This is Deal of two Titans, Tata group and Welspun group. Tata group leasing warehouse space of 6.3 lakh sq ft in Bhiwandi reaffirms two trendsm first relentless demand for grade A warehousing space in outskirts of Mumbai and second steady rise in rentals for quality warehouse space clearly hinting at demand ahead of supply. We foresee this demand supply mismatch to stay in year 2023,” said Abhishek Kiran Gupta, CEO and Co-founder, CRE Matrix.

Also Read: Strong demand drives industrial and warehousing leasing by 9% YoY

The post Bhiwandi Warehouse with 343 Parking leased at Rs 1.62 Cr per month appeared first on Square Feat India.

By Varun Singh

On the unfortunate day of September 21, the entire nation woke up to the sad news of a building crumbling down in Bhiwandi.

Bhiwandi a suburb close to Mumbai witnessed the death of 38 people in the building collapse. In this incident 16 others were injured too.

It took over 5 months period and continuous follow ups for the families of the victims and the injured to be provided with compensation.

On Monday finally the families of the deceased and the injured were provided the compensation.

“38 families were provided Rs 5 lakh each and the injured were given Rs 50,000,” said local Bhiwandi MLA, Rais Shaikh.

In Shaikh’s own words, to see the families receive the compensation it took him a lot of efforts.

“The file seeking compensation was first rejected due to bureaucratic issues citing the reason of the building being illegal,” said Shaikh.

However, Shaikh then followed up with the minister concern and finally got the compensation sanctioned.

Of the Rs 5 lakh, 2 lakh is from the central government and the rest is from state government.

Cluster Redevelopment For Bhiwandi

Bhiwandi has many buildings which are in dilapidated condition and the city in several parts needs urgent planning for redevelopment.

Shaikh says that he has received an assurance from Eknath Shinde, the Minister for Urban Development department, that plans from Bhiwandi seeking cluster redevelopment will sail through smoothly.

The MLA claims that within three months he shall be submitting files to the concerned government departments in regards to cluster redevelopment.

Under cluster redevelopment single buildings aren’t redeveloped, but a cluster of buildings are redeveloped.

This helps in providing better planning and amenities to the residents.

Also Read: Why Bhiwandi Residents Do Not Abandon Dilapidated Buildings?

The post Bhiwandi Building Collapse Victims Receive 5 Lac After 5 Months appeared first on Square Feat India.

By Varun Singh

Monday for many started with the bad news of another building collapse, this time it was in Bhiwandi.

Many residents lost their lives and several other were injured when the three storey structure named Jalil building came crashing down.

Even Prime Minister Narendra Modi tweeted about the building collapse.

The building collapse has once again brought out to the fore a question. The question is, why many residents do not abandon these dilapidated building?

Believe it or not, but politicians have a solution to the problem. Local MLA of Bhiwandi East Rais Shaikh has even answers to this question

Shaikh wrote a letter to CM Uddhav Thackeray on Monday. His letter points out several facts, why Bhiwandi residents cling to collapsing buildings rather than abandoning them.

Shaikh claims residents are not provided with alternate accommodation and hence they continue residing in dilapidated buildings. He explains that, many residents in Bhiwandi are poor, and hence in spite of notices most of them do not leave their house as they have no other place to reside.

Shaikh says the way in Mumbai, there’s transit accommodation facility available for residents of cessed building. The same facility be extended to the residents of Bhiwandi. This probably will help residents move out and save lives.

The sentiments of Shaikh was echoed by Pravin Darekar, leader of opposition in the state council.

Darekar said, “By only giving notices, there won’t be a solution to this issue, residents should be provided alternate accommodation. Only if alternate accommodation is provided will residents move out of dilapidated buildings.”

Both the leader also laid emphasis on having a proper development plan (DP) and development control rules (DCR) for dilapidated buildings.

Shaikh said that there is a need of cluster redevelopment and also regularization of the buildings that were built before the municipal corporation came in Bhiwandi. He also demanded incentive FSI that will boost redevelopment of these buildings.

Darekar says that a proper action plan is needed for the solution of dilapidated building issue.

In Mumbai MHADA’s Mumbai Repair and Reconstruction Board provides alternate transit accommodation to the residents of cessed dilapidated buildings.

Still even in Mumbai most residents avoid going to transit accommodation. The reason being the fear that once they leave their home they might never return.

Many residents have been residing in Prateeksha Nagar’s transit camps for decades. To tackle this situation, the government recently amended the MHADA act, allowing the housing body to take over stuck redevelopment projects.

The rest of Mumbai Metropolitan Region especially the extended suburbs like Bhiwandi, Kalyan, Thane and other areas also need a proper planning. And the lawmakers can only help with this, Especially when they know where the problem lies and have a solution for it too.

Also Read: Mumbai city’s14,500 dilapidated buildings get relief

The post Why Bhiwandi Residents Do Not Abandon Dilapidated Buildings? appeared first on Square Feat India.