Industrial and warehousing sector absorption increases 21.9% year-over-year

According to Savills India, the industrial and warehousing sector saw an absorption of 27.3 million square feet in the first half of 2024, a 21.9% increase from the 22.4 million square feet in the same period of 2023. The 3PL sector led demand with a 33% share, followed by the manufacturing sector at 22% and the FMCG/FMCD sector at 17%. Tier I cities dominated absorption with 78%, while Tier II and III cities comprised the remaining 22%. Supply additions totalled 28.2 million square feet, with 77% in Tier I and 23% in Tier II and III cities. Despite a temporary dip in Grade-A space, the focus on ESG standards is expected to drive demand, with projections showing Grade-A space contributing over 60% to supply and absorption by the end of 2024.

In the first half of 2024, the 3PL sector's share of total absorption decreased to 33% from 44% in 2023, attributed to reduced outsourcing by FMCG/FMCD companies. Consequently, the contribution of the FMCG/FMCD sector rose by 17% from 6%. Demand for warehousing space by FMCG and FMCD occupiers is growing in Tier I, II, and III cities and rural markets. The e-commerce sector is expanding its urban distribution and reach in Tier II and III locations, with notable growth in cities like Patna, Ranchi, and Lucknow. The manufacturing sector's absorption share grew from 16% in 2022 to 22% in the first half of 2024, supported by schemes like the Production Linked Incentive (PLI). The retail sector accounted for 7% of absorption, while cold storage, chemical storage, FTWZs, ICDs, and urban warehousing contributed 15%. Among major cities, Delhi NCR led in absorption (20%), followed by Pune (12%) and Bangalore (11%), with Tier II and III cities making up 22%. In supply, Delhi NCR contributed 17%, followed by Chennai (13%), Bangalore (12%), and Pune and Mumbai (11% each).

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.