Warehousing leasing in Southern cities declines, overall demand rises: Vestian

Warehousing demand falls: The leasing of warehousing spaces in Bengaluru, Hyderabad, and Chennai decreased by 5 per cent to 10.2 million square feet (msf) last year due to subdued demand, according to real estate consultant Vestian.

In 2022, the total leasing of warehousing space in these cities was 10.7 million square feet. A few of the main consumers of warehouse space include e-commerce corporations, engineering and manufacturing organisations, and third-party logistics companies.

Vestian data showed that the share of the three southern cities in total warehousing leasing fell to 27 per cent in 2023 from 34 per cent in the previous year.

However, across seven major cities, including these three, the leasing of warehousing and logistics spaces grew by 21 per cent to 37.8 million square feet in 2023 from 31.2 million square feet in the previous year.

Bengaluru's demand declines

Among these cities, Bengaluru saw a decline in demand to 3.6 million square feet from 4.1 million square feet. Additionally, Hyderabad also witnessed a fall to 3.1 million square feet from 3.7 million square feet. On the other hand, Chennai's leasing of office space grew to 3.5 million square feet from 2.9 million square feet.

Meanwhile, in Mumbai, the leasing of warehousing space surged to 10.2 million square feet from 6 million square feet. Delhi-NCR saw an increase in demand to 8.8 million square feet from 7.3 million square feet, while Pune's warehousing leasing rose to 7 million square feet from 5.2 million square feet.

However, Kolkata warehousing and logistics leasing declined to 1.6 million square feet, from 2.1 million square feet due to the limited availability of Grade A warehouses.

Vestian CEO Shrinivas Rao stated, "The Union Budget 2024–25 is expected to set the tone for the next couple of years.

Recent announcements of infrastructure development in the interim budget may have a positive impact on the sector." He also cautioned that 2024 could be challenging for the warehousing sector due to the downward trend in investments seen in 2023.

(with PTI inputs)