Chennai Warehousing Market Records Healthy Leasing of 3.4 mn sq ft

CHENNAI:
Chennai saw a healthy warehouse leasing activity of 3.4 mn sq ft, according to the ‘India Warehousing Market Report 2020’ report launched by Knight Frank India, a global real estate consultancy. The warehousing asset class in Chennai has witnessed a robust compounded annual growth rate (CAGR) of 22% for the period FY 2017-2020.

In FY2020, the manufacturing industry accounted for more than half i.e. 53% of all warehousing transactions. Inevitably, this resulted in a spike in activity in the Sriperumbudur – Oragadam cluster, a remarkable 67% of the overall FY 2020 transactions, as it is the hub of manufacturing in Chennai.

According to the report, Chennai has a development potential multiple of 2.02 amongst the top eight cities in India. The current stock is reported to be 24 mn sq ft with a potential of expansion to 49 mn sq ft on the committed warehousing land parcel of 2,361 acres in Chennai. Pune along with Chennai have the highest concentrations of Grade A stock, 71% and 69% respectively, due to their primary demand base of auto and auto ancillary occupiers. The rentals for Grade A warehouses range from INR 183-301 /sq m a month (INR 17-28/sq ft a month) in micro-markets of Sriperumbudur-Oragadam cluster and from INR 161-205 /sq m a month (INR 15-19/sq ft a month) in locations across the NH 16-Periyapalayam cluster.

Srinivas Anikipatti, Senior Director – Tamil Nadu & Kerala, Knight Frank India said, “Chennai warehousing market put up a decent show in FY 2020. This year, in Chennai, many e-commerce and FMCG players opted for 3PLs for servicing their logistics needs, causing an increase in the warehousing transactions activity of 3PLs. Rentals remained largely stable through FY2020 with marginal appreciation in some pockets of the Sriperumbudur – Oragadam cluster driven by an increase in warehousing demand of engineering and manufacturing companies. E-commerce players’ increased preference for the Madhavaram-Red Hills belt in the NH 16 – Periyapalayam cluster has resulted in increased transaction activity in this belt in the last two years. On the whole, the outlook remains positive for Chennai warehousing market and it is likely to see robust growth in FY2021.”