The industrial and warehousing sector in India saw a 17% growth in H1 FY24, driven by demand in Chennai and Delhi NCR, boosted by 3PL players.
The industrial and warehousing sector in India witnessed a remarkable uptick in demand during the first half of FY24, driven by an increase in leasing activity and strong performance in key regions like Chennai and Delhi NCR. This trend is expected to continue as both 3PL (third-party logistics) players and developers ramp up their presence in these rapidly expanding markets.
Increased Leasing Activity
The first half of FY24 saw 13 million square feet of industrial and warehousing space leased across India, marking a 17% growth compared to the same period last year. This growth highlights the sustained demand for logistics and warehouse infrastructure, largely due to the expansion of e-commerce, retail, and third-party logistics companies. In particular, the rise of e-commerce platforms and the increased emphasis on faster supply chains have played a pivotal role in driving up leasing activity.
Chennai and Delhi NCR Lead the Growth
Among the top-performing cities, Chennai and Delhi NCR stood out. These regions recorded the highest leasing activity, accounting for a significant share of the total demand. In Chennai, areas like Oragadam saw high demand for industrial and warehousing space. This location, known for its proximity to the automotive and manufacturing hubs, continues to attract key players in the logistics sector.
Similarly, Delhi NCR remains a critical logistics hub, especially in regions like Farukhnagar, where warehousing demand surged. The proximity to the national capital and the region’s robust infrastructure, including highways and airports, makes it an ideal location for businesses focused on distribution and last-mile delivery.
Grade A Warehousing Spaces
To cater to the rising demand, developers are increasingly focused on delivering high-quality, Grade A warehousing spaces. These spaces offer state-of-the-art facilities, including advanced security systems, larger floor plates, and energy-efficient features. This trend is in line with global best practices, as companies seek to improve their operational efficiency and meet the growing expectations of their clients.
Moreover, there is a noticeable shift toward green and sustainable warehousing options. Many new developments now feature eco-friendly designs, utilizing solar power, efficient lighting systems, and rainwater harvesting technologies, making them more attractive to environmentally conscious businesses.
The Role of 3PL Players
Third-party logistics (3PL) providers have been the primary drivers of demand in these key regions. These companies manage the warehousing, transportation, and distribution needs of several businesses, reducing the operational costs for brands while improving efficiency. 3PLs are increasingly leveraging technology to offer real-time tracking, inventory management, and faster delivery solutions, making them a crucial part of India’s evolving logistics landscape.
The growth of 3PL services is reflective of broader trends within the Indian economy. As businesses outsource logistics to experts in the field, they can focus on their core activities while benefiting from more advanced infrastructure and services. This trend is set to continue, as more companies recognize the importance of integrated logistics solutions in improving their supply chain performance.
Positive Outlook for the Remainder of 2024
Looking ahead, the industrial and warehousing sector remains optimistic about the second half of FY24. Experts predict continued strong demand, underpinned by the expansion of e-commerce and manufacturing sectors. Additionally, favorable government policies and infrastructure development initiatives, such as the National Logistics Policy, are expected to further boost the sector’s growth.
Developers and investors are already gearing up for the next phase of growth by planning new projects in key markets across India. The government’s push for faster and more efficient logistics networks, alongside rising foreign direct investment in the sector, will play a crucial role in shaping the future of industrial real estate in the country.
Conclusion
The industrial and warehousing sector in India is poised for continued growth in FY24, driven by increased leasing activity, rising demand from 3PL players, and a focus on high-quality, sustainable spaces. As key markets like Chennai and Delhi NCR continue to thrive, the outlook for the remainder of the year remains positive, setting the stage for further expansion and investment in the country’s logistics infrastructure.
