Leasing of warehousing space slumps 23% across 8 cities in FY'21

Leasing of warehousing space fell 23 per cent to 31.7 million square feet across eight major cities on an year-on-year basis in the last financial year due to the coronavirus pandemic, according to Knight Frank India.

Ahmedabad and Pune witnessed a fall of 42 per cent in leasing of warehousing spaces while Chennai was the only city that recorded a growth of 4 per cent, the property consultant said on Wednesday.

"In FY 2021, the warehousing transactions in the top 8 Indian cities registered a decline of 23 per cent year-on-year to 31.7 million sq ft. This decline can be attributed to the disruption caused by the pandemic and the associated lockdowns that brought economic activity to a near halt and adversely impacted occupier decisions," Knight Frank India said.

Leasing of warehousing space fell by a maximum of 42 per cent in Ahmedabad and Pune during the last fiscal at 3 million sq ft and 2.8 million sq ft, respectively.

The Delhi-NCR market saw a 20 per cent fall in warehousing leasing to 6.9 million sq ft during the 2020-21 fiscal while Mumbai witnessed a 23 per cent decline to 5.8 million sq ft.

In Bengaluru, the warehousing demand remained stable at 4.3 million sq ft.

Leasing fell 22 per cent in Kolkata to 3.1 million sq ft last fiscal year while Hyderabad saw a 30 per cent fall in demand to 2.4 million sq ft.

However, Chennai witnessed a 4 per cent rise in leasing of warehousing space to 3.5 million sq ft in the last fiscal that ended on March 31, 2021 compared with the previous year.

"The past five quarters have been nothing short of a roller coaster ride as successive infection waves adversely impacted human life. During this period, most commercial real estate asset classes have been impacted by the headwinds, including the Indian warehousing sector," Knight Frank India CMD Shishir Baijal said.

However, the inherent strength of the Indian economy, strong domestic consumer base and some unique opportunities arising out of the pandemic have mitigated the impact on the warehousing sector, he added.

He noted that the supply chain disruptions from the pandemic have intensified the need for more institutional players in the warehousing segment which will ensure institutionalisation of the warehouse space, leading to greater participation from the big developers.

"In the short run, occupier activities will be dictated by the intensity of the pandemic. However, in the long-term perspective, the sector should gain momentum aligning itself to India's economy development trajectory," he said.