Pune continues to rise as a warehousing and logistics hotspot even amid the Covid-19 pandemic. According to a recent report by realty firm Knight Frank, the warehousing sector nationally has seen (compound annual growth rate) CAGR growth of 44 per cent since 2017 and Pune has seen 4.9 million square feet of transactions in the financial year 2020 with a CAGR of 35 per cent since 2017.
The city, which had seen 42 per cent year-on-year growth in terms of warehouse transactions, has benefited from the ever growing demand from e-commerce and third party logistics sector. The city had reported the highest growth in warehousing transactions in the country in the last financial year.
Most companies, prefer to rent out warehousing spaces rather than invest their land resources towards it. The growing demand from the sector has seen the Maharashtra Industrial Development Corporation (MIDC) investing portion of its industrial land in Chakan Talegaon industrial area for development of logistics parks.
Third party logistics, e-commerce and manufacturing are the top three sectors in terms of transactions with 36, 23 and 23 per cent transactions respectively in financial year 2020. E-commerce has emerged as the fastest growing sector with a 55 per cent CAGR since 2017. Across the country, 50 million square feet of space is occupied by this sector.
Depending on facilities like insulation, fire fighting system, ground coverage, warehouses are classified as Grade A and B.
While nationally 64 per cent of warehouses available are classified as grade B, the equation seems to be the opposite in Pune. At least 71 per cent of warehouses in Pune are Grade A. Nationally, 15.5 per cent of warehouses have reported vacancies, while the number is 21.8 per cent in Pune.
At present, Pune has 26 million square feet of warehousing stock with a potential of 42 million square feet more. Year-on-year rent in Grade A warehouses has seen a rise of 4-7 per cent. The Pune market has always been dominated by industrial leasing and it will continue to be the major driving force for transactions, according to the report.
However, due to the lockdown, new last mile delivery stations and major local distribution centres were taken up by e-commerce and 3PL companies. Consequently, industrial leasing, which used to account for 60-65 per cent of the total transaction volume, has witnessed a neck-to-neck competition from e-commerce and 3PL Segment, the report said.
Commenting about the future of the sector, Paramvir Singh Paul, branch director, Pune of Knight Frank, said, “The organised players have aggressively taken up land parcels in recent years and this has led to large supply of grade A spaces. As quicker delivery of buildings plays a major factor in leasing of the premises, many developers have constructed speculative buildings to tap into the new demand from e-commerce and 3PL segments. So, during the lockdown period, we have seen addition of close to 3.3 million sq ft of new supply (ready and BTS) coming up in the Chakan-Talegaon belt alone.”
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