While warehousing activity in the top eight Indian markets—Mumbai, the Delhi National Capital Region (NCR), Bengaluru, Pune, Kolkata, Hyderabad, Chennai and Ahmedabad—sustained record-high transactions, reaching 51.3 million square feet (msf) in FY23, the 13 secondary markets studied by the consultant registered a 15 per cent growth, at 15.75 msf, on the back of increased traction.

The compound annual growth rate (CAGR) from FY17-FY23 has been pegged at 24 per cent.

At 39 per cent in FY23, 3PL players secured the highest market share of transactions among the major occupier groups, followed by the manufacturing sector (23 per cent) and retail (13 per cent).

“The volume transacted by the e-commerce sector experienced a 71 per cent YoY decline in FY23 due to the excess capacity built during the pandemic to meet the surge in consumption,” the report noted, adding that this decline in demand is expected to be temporary till existing capacities are exhausted.

Balbir Singh Khalsa, executive director (industrial & logistics), Knight Frank India, said it will take another 9-15 months before e-commerce players start occupying more warehouse spaces.

While FY23 saw occupier demand sustain at the record levels seen in FY22, rents in most markets have maintained the upward trajectory they set in the previous year.

Bengaluru topped the list with an 8 per cent increase followed by NCR (7 per cent) and Ahmedabad, Mumbai and Kolkata (5 per cent).

The development of grade A warehousing facilities has continued to rise in recent years and currently constitutes 40 per cent of the total stock compared to 38 per cent in FY22. This comes in response to increased demand for flexible and sustainable warehousing, the report added.

Fibre2Fashion News Desk (DS)