According to the latest report by Knight Frank India, titled ‘India Warehousing Market Report – 2023’, Coimbatore experienced a decline in warehousing transactions during FY 2023. The city recorded a warehousing transaction volume of 1.15 million square feet, marking a 9% year-on-year de-growth compared to FY 22. The decrease in transactions can be attributed to reduced space leased by third-party logistics (3PL) and fast-moving consumer goods (FMCG) players.
However, the report also highlighted a significant increase in warehouse leasing by retail and manufacturing players. Retail warehouse leasing surged by 200% year-on-year while manufacturing warehouse leasing saw a substantial rise of 114% year-on-year. This demand is driven by the growth of the organized retail sector and the dominance of industries such as heavy pump manufacturing, textiles, and metal casting in Coimbatore.
Among the transaction activities, the retail sector accounted for 39% of the total, followed by the e-commerce and 3PL segments, which accounted for 26% and 17% respectively during FY 23.
The report also analyzed the cluster split of transactions, revealing that the Pollachi + Palladam – Cochin Frontier Road cluster witnessed the majority of transactions. This cluster contributed to 76% of the overall transactions during FY 23, driven by increased demand from the retail, e-commerce, and 3PL industries. On the other hand, the Avinashi cluster saw a significant rise in transactions, contributing 24% in FY 23 compared to just 4% in FY 22.
Despite these changes in transaction volumes, land prices and rental rates remained relatively stable throughout FY 23. Grade A warehouse rents in the Pollachi and Palladam – Cochin Frontier Road cluster ranged from INR 161 to 237 per square meter per month.
The shifting dynamics in Coimbatore’s warehousing market highlight the evolving needs of different sectors and industries. As the organized retail sector expands and manufacturing industries thrive, the demand for warehousing space in Coimbatore continues to evolve.
