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This article is more than 6 month old.

Tough year for warehousing, but this south Indian city bucked the trend

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Chennai registered a 4 percent year-on-year rise as the city registered 3.5 million square feet of warehouse leasing in FY21, in comparison to 3.4 million square feet last year

Tough year for warehousing, but this south Indian city bucked the trend
A survey of the warehousing sector across eight cities, conducted by Knight Frank India, has revealed that leasing transactions saw a significant year-on-year drop across the country in FY21.
Nearly 41.2 million square feet of warehousing space was leased in FY20 -- the last fiscal saw only 31.7 million square feet of new warehousing space, taken on lease -- a drop of 23 percent, pan-India.
While NCR and Mumbai saw 6.9 and 5.8 million square feet worth of warehousing lease transactions respectively, both cities registered a corresponding drop of 20 and 23 percent in these transactions, year-on-year.
In FY20, NCR registered 8.6 million square feet worth of transactions, while Mumbai leased out 7.5 million square feet of warehousing space.
The FY 21 story is similar across other major cities with a significant warehousing presence. Ahmedabad and Pune witnessed a year-on-year drop in warehouse leasing that stood in excess of 40 percent, while Hyderabad registered a 30 percent drop.
Chennai, the top performer
The one outlier to this trend was Chennai, which registered a marginal 4 percent year-on-year rise. The city registered 3.5 million square feet worth of warehouse leasing in FY21, in comparison to 3.4 million square feet last year.
Among the eight cities surveyed, Chennai was the only one that showed growth in warehouse leasing in the last fiscal.
"Despite the disruption in economic operability by the pandemic, Chennai's growth in transaction levels demonstrates the strong warehousing asset base in the city," said Srinivas Anikipatti, Senior Director (Tamil Nadu and Kerala) at Knight Frank India.
"Automobile, textile and manufacturing for heavy industries continue to be the driver industries for city’s industrial and warehousing demand," he added, "E-commerce and retail players have been a recent addition to this list of warehousing demand drivers in Chennai."
Chennai's automobile corridor across Sriperumbudur and Oragadam accounted for 57 percent of its warehousing transactions in FY 21, while its Grand Southern Trunk Road belt accounted for 13 percent of all warehousing transactions in the city. This belt only accounted for 7 percent of these transactions in the previous fiscal.
Bengaluru stayed steady too, registering 4.3 million square feet of warehouse leasing in FY20, which was the exact area it leased out the previous fiscal, in the warehousing sector.
Logistics players lead the charge
For all its growth projections, e-commerce did not exactly account for a lion's share of warehousing transactions in FY21. That honour went to logistics or 3PL players that accounted for 33 percent of all transactions last fiscal.
The Manufacturing sector finished at a close second place, accounting for 32 percent of all transactions, while the Fast Moving Consumer Durables (FMCD) sector took 20 percent of the pie. E-commerce brought up the rear at 11 percent.
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