In 2021, warehousing is expected to witness an increase in in-city requirements to cater to the needs of urban population and for faster and last-mile delivery.

“In-city requirements are mainly driven by e-commerce warehousing requirements and are penetrating deep inside the cities in the busiest of commercial, retail, and residential areas,” said Yogesh Shevade, Head, Industrial Services, JLL, India.

“Constrained supply is also driving re-positioning / usage change of existing assets like malls, high-street retail, marriage halls, auditoriums, showrooms, and workshops,” he added.

As per the ‘India Real Estate Outlook – A new growth cycle’ by JLL, in India Grade A properties have been in demand in 2020 and this demand is anticipated to increase in the coming years due to changing developer preferences and adherence to safety and hygiene norms during Covid-19. Specialised storage including cold chain industry as well as omni-channel retail focused warehouses are the other new vogues gaining attraction.”

Top eight Cities

Despite an unfavorable socio-economic environment, warehousing stock in top eight cities - NCR Delhi, Mumbai, Bengaluru, Chennai, Pune, Kolkata, Hyderabad and Ahmedabad --has added 27 million square feet to reach a total of 238 million square feet in 2020.

JLL in its report said, “The demand is expected to grow around 160 per cent to reach 35 million square feet in 2021 if the external conditions stay stable, mainly if there is no relapse of Covid / lockdown and so on. Probably over the next one to two quarters, a clearer picture will emerge.”

Smaller Cities

JLL's India Real Estate Outlook showed that Tier II & III cities are gaining strength in warehousing is eminent from the changing pattern of a typical warehouse sizes with some large transaction sizes of 0.3 – 0.4 million square feet, even in cities such as Coimbatore and Lucknow as outliers and ranging between 0.1 – 0.2 million square feet in general, as compared to 0.025 - 0.05 million square feet (25,000 – 50,000 square feet) a few years back.

“Scale also brings sophistication (economics of scale) and therefore we have seen pick up in higher infrastructure organised spaces even in Tier II cities. JLL research indicates that warehousing sizes are expected to grow,” said Shevade.

Tier II & III cities of significance (in no order):

*North: Chandigarh ,–Rajpura, Jaipur and Lucknow.

*East: Guwahati, Raipur, Patna and Bhubaneswar,

*West: Surat, Vadodara, and Indore,

*South: Coimbatore, Vizag, Vijayawada and Kochi

Supply & Absorption

Shevade said “In Q4, the market started gaining momentum with highest supply and absorption in 2020 post the lockdown. Industrial spaces witnessed a 13 percent Y-o-Y growth in total stock in Grade A & B warehousing space in top 8 cities. The overall warehousing space stands at 238 million square feet at the end of 2020 compared to 211 million square feet in the previous year thereby resulting in a net supply of 27 million square feet.”

“In 2020 the end -users / tenants have looked for new and innovative ways to take up spaces on short term / temporary leases of tenure 9 -12 months for leasing of ‘white spaces / unused spaces’ in existing leased warehouses on sub-lease. Unfortunately, these do not get captured in net absorptions (considering these are already leased),” he added.