3PL, manufacturing sectors drives high warehouse demand in India
WAREHOUSING & LOGISTICS

3PL, manufacturing sectors drives high warehouse demand in India

A report revealed that the demand for warehouses in the top eight cities in India reached an unprecedented level of 51.3 million square feet (MSF) in the fiscal year 2022-23 (FY23). Mumbai, Bengaluru, and Kolkata witnessed an all-time high in demand. Overall, the country experienced a 24 per cent increase in demand compared to FY22.

Knight Frank, a property consultancy, published the India Warehousing Market Report – 2023, which attributed the surge in demand primarily to the third-party logistics (3PL), manufacturing, and retail sectors. Among these, the 3PL sector observed the highest rise in demand, marking a 34 per cent increase from the previous year. The manufacturing sector also saw significant growth, with a 23 per cent year-on-year (YoY) increase.

However, the e-commerce sector faced a decline in demand during FY23. This was mainly due to the capacity built in previous years to accommodate the surge in consumption during the pandemic, as well as a gradual shift towards flexibility. The report stated that the volume of transactions in the e-commerce sector experienced a 71 per cent YoY decline in FY23. However, this decline is expected to be temporary, as secondary activity is likely to revive once the excess capacity is utilised in the coming year.

The report highlighted that India has benefited from the ongoing trend of companies decentralising their manufacturing capacity from China. Apple, for example, now manufactures seven per cent of its iPhones in India, a significant increase from the meager one per cent in 2021. The report credited the government's "Make in India" initiative and the production-linked incentive (PLI) scheme for boosting the prospects of the manufacturing industry in the country.

While Mumbai and the National Capital Region (NCR) led the market in terms of overall transaction volumes in FY23, Bengaluru and Kolkata witnessed the highest growth in annual transacted volumes, with a 25 per cent and 18 per cent YoY increase, respectively. The growth in the warehousing market is not limited to the top eight cities but has extended to secondary markets as well, supported by improved infrastructure such as highways, railways, and air transportation. The report emphasised the emerging importance of 3PL providers and manufacturing companies as primary players in the industry.

However, the report also noted that inflation in the cement and steel sectors has led to an increase in warehouse rents. During FY23, the top eight cities in India experienced a rise in warehouse rent ranging from three to eight per cent, with Bengaluru witnessing the highest increase of eight per cent. NCR followed with a seven per cent rise, while Ahmedabad saw a five per cent increase.

A report revealed that the demand for warehouses in the top eight cities in India reached an unprecedented level of 51.3 million square feet (MSF) in the fiscal year 2022-23 (FY23). Mumbai, Bengaluru, and Kolkata witnessed an all-time high in demand. Overall, the country experienced a 24 per cent increase in demand compared to FY22.Knight Frank, a property consultancy, published the India Warehousing Market Report – 2023, which attributed the surge in demand primarily to the third-party logistics (3PL), manufacturing, and retail sectors. Among these, the 3PL sector observed the highest rise in demand, marking a 34 per cent increase from the previous year. The manufacturing sector also saw significant growth, with a 23 per cent year-on-year (YoY) increase.However, the e-commerce sector faced a decline in demand during FY23. This was mainly due to the capacity built in previous years to accommodate the surge in consumption during the pandemic, as well as a gradual shift towards flexibility. The report stated that the volume of transactions in the e-commerce sector experienced a 71 per cent YoY decline in FY23. However, this decline is expected to be temporary, as secondary activity is likely to revive once the excess capacity is utilised in the coming year.The report highlighted that India has benefited from the ongoing trend of companies decentralising their manufacturing capacity from China. Apple, for example, now manufactures seven per cent of its iPhones in India, a significant increase from the meager one per cent in 2021. The report credited the government's Make in India initiative and the production-linked incentive (PLI) scheme for boosting the prospects of the manufacturing industry in the country.While Mumbai and the National Capital Region (NCR) led the market in terms of overall transaction volumes in FY23, Bengaluru and Kolkata witnessed the highest growth in annual transacted volumes, with a 25 per cent and 18 per cent YoY increase, respectively. The growth in the warehousing market is not limited to the top eight cities but has extended to secondary markets as well, supported by improved infrastructure such as highways, railways, and air transportation. The report emphasised the emerging importance of 3PL providers and manufacturing companies as primary players in the industry.However, the report also noted that inflation in the cement and steel sectors has led to an increase in warehouse rents. During FY23, the top eight cities in India experienced a rise in warehouse rent ranging from three to eight per cent, with Bengaluru witnessing the highest increase of eight per cent. NCR followed with a seven per cent rise, while Ahmedabad saw a five per cent increase.

Next Story
Resources

Madhya Pradesh Champions Inclusive Tourism at Heritage Sites

On the occasion of World Heritage Day, Madhya Pradesh is taking a significant step toward inclusive tourism by making its historical sites accessible to all — especially persons with disabilities. The state is rolling out its ‘Accessibility Infrastructure and Development’ project at Maheshwar, Mandu, Dhar, and Orchha, aiming to create a more welcoming experience at these iconic cultural destinations.The initiative, under the leadership of Chief Minister Dr Mohan Yadav and Tourism Minister Shri Dharmendra Bhav Singh Lodhi, includes infrastructure upgrades such as ramps, Braille signage, w..

Next Story
Resources

Runwal Realty Onboards Sonam Kapoor as Brand Ambassador

Real estate major Runwal has unveiled a refreshed identity as Runwal Realty, signalling a renewed commitment to crafting spaces that stand the test of time. With this refresh, the brand unveils its new philosophy: “Building for Generations to Come” and welcomes Bollywood star and global fashion icon Sonam Kapoor as its brand ambassador. This evolved identity reflects Runwal Realty’s commitment to creating not just homes, but heirlooms—crafted through visionary design, meticulous planning, global design expertise and an unwavering focus on quality. With the customer at its core, each de..

Next Story
Infrastructure Urban

Emerging Trends in Infrastructure and Transport 2025: KPMG

KPMG’s latest report, The Great Reset: Emerging Trends in Infrastructure and Transport 2025 edition, sheds light on the profound changes transforming the global infrastructure landscape. As industries adapt to the challenges posed by climate change, economic pressures, and technological advancements, the report identifies key trends and provides actionable insights for leaders in infrastructure and transport sectors. “In today’s interconnected world, the lack of standardized supply chain practices is not just an operational challenge—it’s an environmental and economic one. We’..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?