Graph & Analysis

What type of companies are occupying the warehousing spaces in India?

2/3rd of the warehousing demand is shared between e-commerce & 3PL firms

6th December 2021
  • The e-commerce sector will drive bulk of the volume, as the accelerated growth trajectory that the pandemic pushed the sector toward is expected to sustain. Most consumers that were forced to shop online will continue to do so and the existing brick-and-mortar stores will also look to leverage online channels to push sales. The 3PL sector will sustain market share as e-commerce and other sectors increasingly outsource their warehousing requirements to specialists in the field.
  • Indian e-commerce market is on the cusp of its next phase of growth with Indian business giants such as the Reliance and Tata groups have entered in this field along with global players including Amazon and Walmart to capture this growing market. A growing economy like India with the second largest population in the world still holds massive potential for its warehousing market which will fructify over the next few years.
  • It is estimated that the e-commerce sector will consume the most space in the next five year (2021-2026). Similarly, 3PL and Other Sector companies are expected to take up more space in the next five years compared to the preceding period. These three occupier groups are expected to account for almost 90% of the total transacted space in the next five years.

Stock, Absorption & Rental Values for Warehousing Space in Top 8 Cities of India

Delhi NCR, Mumbai, and Bangalore account for 60% of top eight market absorption and the same trend is expected to continue; Tier 2 locations are expected to generate demand of 25% of the gross absorption of India market

2nd November 2021
  • The eight prime markets of India held an estimated 252 mn sqft of warehousing stock at the end of H1 CY 2021. The Mumbai & Delhi NCR market accounts for 40% of this stock. The larger warehousing markets of Mumbai and Delhi NCR have a significantly lower proportion of Grade A warehouses as they are much older markets and the bulk of their stock had been built before the demand for Grade A warehousing gathered momentum. Bangalore, Pune, and Chennai have the higher levels of Grade A stock due to their primary demand base of ecommerce, auto and auto ancillary occupiers.
  • Prominent cities or Tier 2 markets that are witnessing increased warehousing developments are Guwahati, Coimbatore, Bhubaneshwar, Lucknow, Visakhapatnam, Kochi, Vapi and Surat. Annual demand in these markets have grown significantly; from a share of 10% in 2015 the absorption in these markets have grown to 20% of the total demand across top 8 markets in the year 2020. We expect this trend to continue, and tier 2 locations will have a share of 25% of the prime markets in next few years.
  • Absorption is likely to grown between 18% and 22% annually for most of the markets. Rental escalations for Grade A space are expected to be between 4% and 6% and 3% to 5% for Grade B spaces in the coming three years.