Strong demand sustains with 5.72 mn sq ft of net absorption in 2024

• The year 2024 witnessed net absorption and gross absorption of 5.72 mn sq ft and 10.5 mn sq ft, respectively. Delhi-NH8 submarket accounted for the highest demand followed by Faridabad – Palwal.
• The demand is primarily driven by 3PL/ Logistics contributing 47%, followed by FMCD, Retail and E-Commerce sectors. Occupiers consistently showed a strong preference for high-quality, compliant spaces, resulting in Grade A accounting for 79% of the demand.

Delhi-NH8 leads with more than 80% of new supply

• The warehouse market expanded significantly this quarter, with 10.2 mn sq ft of new space added. The Delhi – NH8 area led in terms of new supply, followed by Faridabad – Palwal and Ghaziabad – Noida.
• Vacancy rates have increased to 21.2% due to significant increase in new supply as compared to demand. Grade A warehouses witnessed significant increase in supply leading to its vacancy increase to 15.8% in 2024.

Prime Grade A demand spike drives 5.1% y-o-y rental surge, reflecting high-quality space leasing

• Robust demand for Grade A warehouse space and growing interest from institutional developers and investors, has driven a significant 5.1% y-o-y increase in rental prices. Rising land costs also contribute to this upward trend.
• Rental prices are predicted to keep rising in the near term, largely due to increased investment from major institutional players such as Indospace, Horizon Industrial Parks, LOGOS, Ascendas, and Welspun.

Outlook: Infrastructure projects boost warehousing demand; demand of 10.5 mn sq ft projected for 2025

• NCR warehousing stock is projected to reach 112 mn sq ft by 2025, primarily driven by Grade A projects backed by institutional investors. The Delhi-NH8 submarket will maintain its high level of activity, leading in both supply and demand.
• Proposed infrastructure projects such as DMIC, WDFC, and EDFC, are influencing warehousing demand by improving connectivity between Delhi and other regions of India. This increasing demand is expected to support vacancy declining below 15% over the next 3 years.