Grade A warehousing demand is likely to grow at a compound rate of of 12.5 percent a year until FY30, with the retail and e-commerce sectors providing the impetus, according to an analysis by Alvarez & Marsal India, a global professional services firm.
The report estimated that over the next five years, retail, third-party logistics (3PL) and e-commerce will drive 80 percent of Grade A warehousing demand, with absorption seen at 410 million square feet (msf).
Currently, up to 70 percent of demand for Grade A warehousing—typically, well-located newer properties with higher-end amenities— comes from the major real estate markets of Delhi and its environs, the Mumbai area, Bengaluru, Chennai and Pune.
Manish Saigal, Alvarez & Marsal India managing director and business transformation services practice co-leader, said that the evolution of warehousing in India from simple ‘godowns’ to sophisticated logistics hubs signals a new era of efficiency and resilience in supply chain management.
“Demand for Grade A warehousing stock will grow at a compounded annual growth rate (CAGR) of 12.5 percent until FY30. Absorption of grade A warehouses in FY24 was 202 msf, which is going to be double by FY2030 to 410 msf. The largest consumers for warehousing are 3PLs and e-commerce followed by modern retail and the FMCG sector. In the next five years, e-commerce is expected to grow by 20-25 percent, 3PLs by around 11-12 percent and modern retail by about 6-7 percent,” Saigal told Moneycontrol.
Warehouses no longer serve as mere storage facilities but rather as multifunctional logistics hubs integral to the seamless functioning of the supply chain and a superior choice for businesses aiming to optimise operations, the report highlighted.
Warehousing in tier-2 towns picking up
Saigal said that though the key markets for warehousing sector are Mumbai Metropolitan Region, Delhi-National Capital Region, Pune, Bengaluru, Hyderabad and Chennai, several tier-2 cities are also picking up in terms of warehousing demand.
“There is a trend shifting towards smaller markets, especially e-commerce going into smaller towns, and we are seeing demand for warehousing coming from tier-2 and tier-3 towns. Warehousing demand in tier-2 cities like Lucknow, Jaipur and Indore is picking up,” Saigal said.
Jewar airport region
Saigal stressed that within the NCR, Haryana's Sohna, Farrukhnagar, Bilaspur and the NH-8 belt all near Gurugram are the clusters preferred by warehousing and logistics players.
He said that since the Noida International Airport off the Yamuna Expressway is being positioned as a cargo-focused hub, there will be some level of shift towards the national capital's satellite city in Uttar Pradesh after the airport at Jewar becomes functional.
“The industrial and manufacturing belt located in Faridabad and Palwal areas (in Haryana) will begin to see the need to do their warehousing distribution from in and around that (Noida airport) area. We do believe that you will see some capacity of warehousing coming in that area in future,” he said.
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