Strong expansion activity continues: 2.47 million sq ft of warehouse space leased in Q3 2024

• Demand surged 33% q-o-q in Q3, with net & gross absorption of 1.83 and 2.47 million sq ft, respectively. Delhi-NH8 led the demand, followed by Faridabad-Palwal and Ghaziabad-Noida reflecting increasing logistic needs & strategic location preferences in the region.
• 3PL dominated the increased demand in Q3, with FMCD, engineering, and e-commerce sectors also being key contributors. Occupiers consistently showed a strong preference for high-quality, compliant spaces, resulting in Grade A accounting for majority of the demand.

Over two-thirds of new Grade A supply to be institutionally-backed projects

• The warehouse market expanded significantly in the quarter, with 2.52 million sq ft of new space added. The Delhi – NH8 area led in terms of new supply, with Faridabad – Palwal and Ghaziabad – Noida following as the next most active areas for warehouse development.
• Vacancy rates rose slightly to 19% in Q3 2024 due to new supply outpacing demand. The Grade A vacancy reduced significantly by 50 bps q-o-q to 6.8% on the back of increasing demand for quality space in the market.

Prime Grade A demand spike drives 4.9% y-o-y rental surge, reflecting high-quality space leasing

• Robust demand for Grade A warehouse space, coupled with stable vacancy rates and growing interest from institutional developers and investors, drove a significant 4.9% y-o-y increase in rents. Rising land costs also contributed to this upward trend.
• Rents are predicted to keep rising in the near term, largely due to increased investment from major institutional players such as Indospace, Blackstone, LOGOS, Ascendas, and Welspun, as well as increasing demand for Grade A spaces.

Outlook: Infrastructure projects boost 2024 warehousing demand, year-end stock projected at 98 million sq ft

• NCR warehousing stock is projected to reach 98 million sq ft by end-2024, driven by Grade A, institutionally-backed projects by Indospace, Ascendas, Blackstone, Welspun, and ESR. The Delhi-NH8 submarket is expected to dominate in the near future, leading in both supply & demand.
• Proposed infrastructure projects such as DMIC, WDFC, and EDFC, are significantly influencing warehousing demand. These developments, coupled with the increasing e-commerce and 3PL sector growth, are expected to keep vacancy rates below 15% over the next four years.