Chennai records 3.5mn sq ft of warehousing leasing activity in FY 2021: Knight Frank India

Knight Frank India, an International Property Consultant, in their latest report‘India Warehousing Market Report 2021’, cited that Chennai has recorded a total of 0.3 mn sq m (3.5 mn sq ft) of warehousing leasing activity in FY 2021. The city recorded a 4% YoY growth in warehouse space absorption despite the pandemic exigencies. Chennai is also the only city amongst the top eight markets to record positive YoY growth in FY 2021. Within the city, the highest leasing activity was concentrated in the Sriperumbudur-Oragadam cluster while the primary demand driver was the 3PL category in FY 2021. Land rates have appreciated across micro markets while rentals have remained more or less stableacross the city during the last year.

In terms of the leasing activity from the aspect of the industry, 3PL players were the primary driver with a share of 33% in the total warehousing transactions pie in FY 2021. Other Sectors (which include all manufacturing companies excluding FMCG and FMCD) stood second with a 32% demand share followed by the FMCD category at 20% and the e-commerce sector at 11%.

In terms of geography, demand continued to remain concentrated in the Sriperumbudur – Oragadam cluster which accounted for 57% of the total FY 2021 transactions. Besides its manufacturing base, this cluster also witnessed increased demand from e-commerce and 3PL players in FY 2021. The demand share of the GST Road –Maraimalai Nagar cluster jumped from 7% in FY 2020 to 13% in FY 2021 on account of one large transaction of 0.03 mn sq m (0.3 mn sq ft).

At the current level of 71% stock constituted by Grade A category, Chennai,along with Pune, has the highest proportion of Grade Awarehousing inventory in the country. The weighted average transacted rent for Grade A inventory was seen at INR 229/ sq m/ month(INR 21/ sq ft/month).

Srinivas Anikipatti, Senior Director - Tamil Nadu and Kerala at Knight Frank India comments, “Despite the disruption in economic operability by the pandemic, Chennai’s growth in transaction levels demonstrate the strong warehousing asset base in the city. Automobile, textile and manufacturing for heavy industries continue to be the driver industries for city’s industrial and warehousing demand. E-commerce and retail players have been a recent addition to this list of warehousing demand drivers in Chennai.”