E-commerce, 3PL drive up warehousing rentals

The demand for warehousing and logistics space, led by the expansion of e-commerce and growth of third-party logistics (3PL) companies, is pushing rentals in this segment.

Rents in key warehousing markets have risen over 5% so far in 2022 as against a compounded annual growth rate (CAGR) of not more than 3% witnessed between 2015 and 2021, showed data from JLL India.

According to industry estimates, e-commerce companies such as Flipkart and Amazon have leased over a quarter of India’s total warehouse capacity in the last two years. This is projected to accelerate further.

“The spurt in demand for warehousing spaces led by 3PL and ecommerce is now being complemented by retailers across industries and across markets,” said Chandranath Dey, head – operations & business development, logistics and industrial, JLL, India.

 “Inquiries and deal conclusions have surged as they witness recovery in sales in the last few months following the Omicron wave, putting upward pressure on rentals.”

Average rentals in Indian warehousing still continue to be much lower

However, according to him, average rentals in Indian warehousing still continue to be much lower than developed and other emerging markets such as Australia and Vietnam, respectively.

Average monthly warehousing rentals for grade A properties are hovering around Rs 21 per sq ft a month and Rs 18 per sq ft for grade B spaces.