
The second-fastest growing warehousing market in India’s top eight cities, Chennai has, in 2024, registered a 29% year-on-year (YoY) growth in transaction volumes. According to a report released by Knight Frank India, a prominent property consultancy firm, the city witnessed transactions for the third quarter at 5.8 million square feet (mn sq ft), with demand primarily fueled by the manufacturing sector.
Manufacturing sector data yielded 54% of total warehousing transactions in Chennai, reflecting the substantial 103% YoY growth. On a national scale, the city claimed the second position for leasing volume in manufacturing, accounting for a 14% share among prominent Indian markets. Chennai’s rise as a manufacturing and industrial destination is further underlined by this.”
Other industries added to the boom, too. YoY retail transactions jumped 94% while the e-commerce segment witnessed an incredible 1,158% growth YoY (largely off a low base last year). That surge is driven by increasing consumer demand and the expansion of last-mile delivery networks. Demand from third-party logistics (3PL) providers, on the other hand, continued to be strong, reaffirming its importance in the city’s supply chain ecosystem.
The warehousing activity across Chennai is concentrated in the key industrial zones, with most of the concentration in the Sriperumbudur-Oragadam cluster, as the leading one. A major hub for automotive and allied industries, this region saw 61% of the city’s total warehousing transactions. This cluster covers vital locations like Mevalurkuppam, Mappedu, Mannur and Thiruvallur and serves Chennai’s manufacturing sector with its increasing storage needs.
The NH 16/GNT Road-Periyapalayam cluster accounted for 33% of the overall city transactions, as demand was driven by the manufacturing and 3PL sectors.
Steep Land Prices and Rental Expansion
Rental values and land prices are on an upward trend in Chennai’s warehousing space. In 2024, the average rental value was ₹ 23.9 per sq ft per month, representing a YoY increase of 2%, from ₹ 23.4 per sq ft in 2023.
Of Chennai’s key warehousing locations, Maraimalai Nagar recorded the highest rental rates, with Grade A spaces leasing at ₹27-29 per sq ft per month. Mahindra World City saw rentals range in the range of ₹24-28 per sq ft.
Outlook and Future Potential
Chennai has a development supply of 40.7 mn sq ft, which can support the future demand at ~7 times of 2024 annual transaction volume.
“Chennai holds strategic importance as a major manufacturing hub contributing to sectors such as automotive, electronics, and engineering, making the city a vital component of the Indian economy,” said Shishir Baijal, Chairman and Managing Director of Knight Frank India. The warehousing sector in the city continues to be strong, bolstered by infrastructure developments and government initiatives.”
Chennai’s warehousing market is expected to grow in years to come with sustained growth coming from continued investments and expansion of industrial activity.
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