Chennai ranks top in warehousing leasing among eight cities

CHENNAI:
Chennai ranks top among the eight real estate markets when it comes to warehousing leasing for the financial year 2021. According to a Knight Frank report, the city clocked 3.5 million square feet of warehousing leasing activity this financial year and is the only city among the eight markets to record positive growth.

The study by Knight Frank states that the city recorded 4pc year on year growth in warehouse space absorption despite the pandemic exigencies. Within the city, the highest leasing activity was concentrated in the Sriperumbudur-Oragadam cluster while the primary demand driver was the 3PL category/ Land rates have appreciated across micro markets while rentals have remained more or less stable across the city during the last year, the report stated.

The other seven markets include Mumbai, National Capital Region, Kolkata, Ahmedabad, Bengaluru, Pune and Ahmedabad.

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

The major warehousing locations are Sriperumbudur – Oragadam cluster, which include Irrungattukottai, Sriperumbudur, Oragadam and other locations on the in-roads branching from Sriperumbudur, Mannur – Thiruvallur Belt, which includes Mevalurkuppam, Mappedu, Mannur, Pollivakkam and Thiruvallur, and NH 16 / GNT Road – Periyapalayam cluster (North Chennai) which includes Periyapalayam Road, Thatchoor, Gummudipoondi and NH 16 / GNT Road – Redhills Belt which ncludes Madhavaram, Manali, Red Hills, Puzhal, Karanodai, Alamathi and Poochettipedu besides GST Road - Maraimalai Nagar cluster.

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

Srinivas Anikipatti, Senior Director - Tamil Nadu and Kerala at Knight Frank India says, “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.”