Chennai warehousing market records healthy leasing of 3.4 mn sq ft in FY2020: Knight Frank India
- ‘India Warehousing Market Report 2020’ report launched by Knight Frank India
Chennai, 2nd July, 2020: In FY2020, 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 FY2017-2020.
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.
WAREHOUSING STOCK AND SUPPLY
Market
|
Total
warehousing land (Acres)
|
Existing
Stock in
|
Total
warehousing potential in mn sq m (mn sq ft)
|
Development
potential multiple*
|
mn
sq m (mn sq ft)
|
||||
Mumbai
|
6,625
|
11.2 (121)
|
15.5 (167)
|
1.37
|
NCR
|
4,178
|
5.3 (57)
|
9.3 (100)
|
1.75
|
Chennai
|
2,361
|
2.2 (24)
|
4.6 (49)
|
2.02
|
Bengaluru
|
2,210
|
2.3 (25)
|
4.5 (48)
|
1.89
|
Pune
|
1,814
|
2.4 (26)
|
3.9 (42)
|
1.61
|
Ahmedabad
|
1,587
|
1.7 (18)
|
3.4 (37)
|
2.09
|
Hyderabad
|
1,291
|
1.2 (13)
|
2.7 (29)
|
2.19
|
Kolkata
|
1,098
|
2 (21)
|
2.6 (28)
|
1.29
|
Total
|
21,163
|
28.3
(307)
|
46.5
(500)
|
1.63
|
Source: Knight Frank Research
*’Development
Potential Multiple’ depicts the total development potential of the warehousing
stock in a market, as a multiple of its existing stock
TRANSACTIONS IN THE WAREHOUSING SPACE
City
|
FY2020
|
FY2020
|
FY
2017-20 CAGR
|
mn
sq m (mn sq ft)
|
change
YoY
|
||
NCR
|
0.8 (8.6)
|
-32%
|
45%
|
Mumbai
|
0.7 (7.5)
|
8%
|
69%
|
Ahmedabad
|
0.5 (5.1)
|
5%
|
43%
|
Pune
|
0.5 (4.9)
|
42%
|
35%
|
Bengaluru
|
0.4 (4.3)
|
-23%
|
50%
|
Kolkata
|
0.4 (3.9)
|
-14%
|
43%
|
Chennai
|
0.3 (3.4)
|
-19%
|
22%
|
Hyderabad
|
0.3 (3.4)
|
-14%
|
41%
|
Total
|
3.8 (41.3)
|
-11%
|
44%
|
Source: Knight Frank
Research
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.”
TRANSACTIONS IN THE WAREHOUSING SPACE
City
|
FY2020
|
FY2020
|
FY
2017-20 CAGR
|
mn
sq m (mn sq ft)
|
change
YoY
|
||
NCR
|
0.8 (8.6)
|
-32%
|
45%
|
Mumbai
|
0.7 (7.5)
|
8%
|
69%
|
Ahmedabad
|
0.5 (5.1)
|
5%
|
43%
|
Pune
|
0.5 (4.9)
|
42%
|
35%
|
Bengaluru
|
0.4 (4.3)
|
-23%
|
50%
|
Kolkata
|
0.4 (3.9)
|
-14%
|
43%
|
Chennai
|
0.3 (3.4)
|
-19%
|
22%
|
Hyderabad
|
0.3 (3.4)
|
-14%
|
41%
|
Total
|
3.8 (41.3)
|
-11%
|
44%
|
Source: Knight Frank
Research
SrinivasAnikipatti, 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.”
About Knight Frank
Knight Frank LLP is
the leading independent global property consultancy. Headquartered
in London, Knight Frank has more than 19,000 people operating from over 512
offices across 60 markets. The Group
advises clients ranging from individual owners and buyers to major developers,
investors and corporate tenants. For further
information about the Company, please visit www.knightfrank.com.
In India, Knight
Frank is headquartered in Mumbai and has more than 1,400 experts across
Bangalore, Delhi, Pune, Hyderabad, Chennai, Kolkata and Ahmedabad. Backed by strong research and analytics, our experts offer a
comprehensive range of real estate services across advisory, valuation and
consulting, transactions (residential,
commercial, retail, hospitality, land & capitals),
facilities management and project management. For more
information, visit www.knightfrank.co.in
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