HYDERABAD: Driven by consumer durables, third-party logistics (3PL) players and manufacturing occupiers, Hyderabad has witnessed healthy demand for warehousing in the first half of 2022. Despite the limited availability of high-quality Grade A warehousing space, H1 2022 recorded more than 1.1 million sqft of warehouse leasing thanks to robust leasing activity at Grade B facilities.
According to a Cushman and Wakefield report, consumer durables accounted for 37 per cent of warehousing space leasing during H1, followed by 3PL companies and industrial segments contributing 30 per cent and 21 per cent respectively. Established warehouse hotspots of northern and southern corridors that offer high-quality warehousing space contributed to approximately 80 per cent of total leasing activity during H1.
However, the availability of quality projects in such locations have been on a constant decline due to robust leasing activity recorded in the recent past. During H1 2022, established locations witnessed around 3,50,000 sqft of new supply with 100 per cent pre-commitment from reputed 3PL and consumer durables occupiers.
The report said that the State government has been actively focusing on attracting investments in the electronics, defence, pharmaceuticals, data centres, manufacturing and R&D sectors over the last few years and also rolled out several incentives.
Policies such as growth in dispersion (GRID), TS-iPASS and the recent State Logistics Policy 2021-26, which places the logistics sector in the 14 thrust areas, are key initiatives of the government. By the end of H1 2022, Telangana climbed two spots to reach 8th rank in the ‘Logistics Ease Across Different States’ (LEADS, 2021), from 10th spot in H2 2021.
Some of the recent investments are VEM Technologies Pvt Ltd at NIMZ, Zaheerabad, GMR Hyderabad Aviation SEZ Ltd and Schneider Electric’s agreement to build a manufacturing facility at Shamshabad and Safran’s plans to set up largest aircraft engine MRO facility at GMR Industrial Park, Shamshabad are expected to strengthen the investment. Meanwhile, quoted rentals for industrial and warehousing space across the city have witnessed five to seven per cent increase in H1 2022 over H2 2021 and recorded around 10 per cent growth on a Y-o-Y basis.
Warehousing deals in Grade-B/independent space account for over 50 per cent of the total leasing activity in H1, recording a significant growth over the last 12 to 18 months. Warehousing rents are also driven by a growing number of active inquiries from F&B, FMCG, pharmaceutical and industrial sectors.