E-commerce is reported to be the largest driver for the demand for warehouses. The sector accounted for 61% of the region’s warehousing transactions.
In FY 2021, 3rd-Party-Logistics (3PL) players accounted for 26%. The increased reliance on online shopping during the lockdown has resulted in many companies expanding their last-mile-delivery footprint and drive higher volumes. 3PL players, servicing the e-commerce sector are taking up Grade A warehousing space to ensure the seamless expansion of the last-mile-delivery mechanism.
“The disruption in economic activity caused by the pandemic has influenced lower than expected transaction volumes for NCR’s warehousing market in FY 2021. While transactions were mostly muted in the industrial sector, e-commerce witnessed an expansion in its warehousing footprint,” said Mudassir Zaidi, Executive Director – North, Knight Frank India.
With respect to cluster split transactions, warehouses in NH-48/Kundli Manesar Palwal Expressway (KMP) region accounted for 73% of the total transacted volume during FY 2021.
KMP has attracted several major occupiers such as Amazon, Delhivery, Flipkart, DHL for warehousing space. While most big players already had existing warehousing facilities on the KMP, some locations which are accessible from NH-48, such as Farrukhnagar, Bilaspur-Tauru- Sohna Road and Pataudi – Luhari Road have assumed strategic importance in the past few months due to greenfield development opportunities and competitive rents.
NCR’s connectivity to different states, large-scale manufacturing units and industrialization has facilitated the region to be considered as one of the most preferred hubs for warehousing in India, with an enormous potential for incremental warehousing stock to be added by institutional and local developers.
On the aspect of warehouse rentals during the same period, rents have largely been stable, although, the second wave could push occupiers for better contractual terms and benefits.
“Rents have largely remained stable during FY 2021. In the aftermath of the second wave of Covid-19, occupiers are likely to push for better contractual terms and other benefits. With strong market fundamentals, a sustainable economic turnaround and success of the vaccination drive campaign will script the bounce-back of the warehousing sector in the NCR region,” said Zaidi.
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