CHENNAI: Chennai saw a healthy warehouse leasing activity of 3.4 million square feet with the manufacturing industry accounting for 53 per cent of all transactions, according to the ‘India Warehousing Market Report 2020’ report by Knight Frank India, a global real estate consultancy.
The previous year witnessed transactions of 4.2m square feet, and the report attributes this year’s decline to a dearth of quality supply and the slowdown in auto sector. The report predicted that the pandemic crisis underway will have adverse effects on the warehousing sector.
The manufacturing industry accounting for 53 per cent of all warehousing transactions, triggered an activity spike in the Sriperumbudur - Oragadam cluster, as it is Chennai’s manufacturing hub.Warehousing activity in Chennai is concentrated in three clusters — one expanding over the south-west and west of the city, second stretching across the city’s northern belt and the third spreading across Chennai’s south region. It is learnt that the warehousing asset class in Chennai witnessed a robust compounded annual growth rate of 22 per cent for the period 2017-2020.
According to the report, Chennai’s warehousing current stock is reported to be 24 million sq ft with a potential of expansion to 49 million sq ft on the committed warehousing land parcel of 2,361 acres in Chennai. Knight Frank India Senior Director (Tamil Nadu and Kerala) Srinivas Anikipatti said that rentals remained largely stable through the previous financial year with the marginal appreciation in some pockets of the Sriperumbudur - Oragadam cluster driven by an increase in warehousing demand of engineering and manufacturing companies. “On the whole, the outlook remains positive for Chennai warehousing market and it is likely to see robust growth in the next financial year,” he said.