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Saturday, July 24, 2021

Ahmedabad, Pune see 42 % dip in warehousing transactions

Despite the poor show by Ahmedabad, three other warehousing centres in Gujarat including Surat, Vapi and Vadodara, south of Ahmedabad, registered a growth in warehousing transactions.

By: Express News Service | Ahmedabad |
Updated: July 8, 2021 3:08:11 am
During 2020-21, Surat saw an 80 per cent year-on-year growth in transactions that were fuelled by demand from e-commerce and 3PL (third party logistics) firms. (File)

Hit by the Covid-19 pandemic, the annual warehousing transactions in both Ahmedabad and Pune fell by 42 per cent, the highest drop among top eight markets in India during the financial year 2020-21, states a warehousing market report unveiled by global real-estate consultants, Knight Frank India.

Despite the poor show by Ahmedabad, three other warehousing centres in Gujarat including Surat, Vapi and Vadodara, south of Ahmedabad, registered a growth in warehousing transactions. The four centres in Gujarat recorded a cumulative warehousing transaction of 4.8 million square feet. “Gujarat’s warehousing market, during the pandemic has flipped, with established centres not performing to their full potential, primarily because of the economic slowdown caused by the pandemic. Other markets that performed significantly better, were driven by renewed demand from e-commerce and 3PL segment,” said Balbirsingh Khalsa, national director of Knight Frank India.

On Thursday, Amazon India is due to make a major announcement for the MSME sector in Gujarat, likely in Surat.

During 2020-21, Surat saw an 80 per cent year-on-year growth in transactions that were fuelled by demand from e-commerce and 3PL (third party logistics) firms.

While 3PL accounted for 50 percent of the 8.27 lakh square feet (or 0.8 million square feet) of warehouse leasing transacations, while e-commerce cornered 25 percent of the transactions. Moreover, 38 percent of the transactions took place on the Kosamba-Palsana belt in Surat.
While three million square feet of warehousing space was leased in Ahmedabad during last fiscal, 2.8 million square feet of leasing transactions took place in Pune. The monthly rentals in both the cities also fell during this period. While the biggest drop in rentals was seen in Mumbai (7 percent), in Ahmedabad warehousing rentals fell by three percent and by one percent in Pune.

Similarly in Vapi, the leasing volumes grew by 296 percent to 6.34 lakh square feet (or 0.6 million square feet). A significant portion of the demand was from industrial segment which includes light to heavy manufacturing activities. In Vadodara, the warehousing space registered a 2.5 percent growth with 4.51 lakh square feet (or 0.4 million square feet) being leased out.

Ahmedabad — the biggest warehousing market in Gujarat having 21 million square feet of warehousing stock — saw vacancies in warehouses jump to 23 per cent, which was second highest in the country after Bengaluru (25.2 percent). In 2019-20, the warehousing vacancy was only 13 percent in Ahmedabad. “The decline was on account of a pandemic induced slowdown of the economy,” the report stated.

“The interest from e-ecommerce firms for in-city warehousing continues to grow. Large e-commerce companies have taken up smaller spaces to augment their in-city last mile delivery networks. These spaces have higher rents compared to traditional warehousing,” the Knight Frank report stated about Ahmedabad. The largest demand for warehouses in Ahmedabad was from automobiles, electronics, pharmaceuticals among others. The warehousing cluster in Changodar-Bagodara accounted for 33 per cent of the transactions during the year.

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