Chennai, with its port accessibility and strategic location, is a major commercial and industrial hub. As per the Chennai Corporation, 15,000 industries and factories are licensed in Chennai city alone, making it the largest industrial and commercial centre in South India.
With manufacturers rethinking global supply chains, the need for Grade A warehousing to store finished products is becoming paramount. This is a huge opportunity for a hub like Chennai, not just for its infrastructure but also as a nodal seaport within Asia. Over the years, Chennai and its surrounding regions have become the preferred locations of business for many automobile companies and ancillary units. In addition, e-commerce sector has also witnessed significant growth this region. These drivers have led to a substantial rise in demand of Grade A warehousing facilities in and around Chennai.
According to the Knight Frank India Warehousing Market Report, in 2020, Chennai witnessed more than 3.4 million square feet of leasing business with nearly 53% of the transactions coming from the manufacturing sector. The report further suggested that Chennai’s warehousing stock has the potential to grow to 49 million square feet from the current 24 million square feet. The potential supply amounts to 5 years of demand basis the FY2020 absorption rate.
Chennai accounts for about 45% of India’s automobile components manufacturing industry. Moreover, several units of global original equipment manufacturers like Mitsubishi, Ford, Hyundai, Ashok Leyland, Royal Enfield, TAFE, MRF and Dunlop are headquartered in or around the city. Chennai is also a major contributor to India’s leather exports and has witnessed a marked surge in leather manufacturing over the past few years.
Additionally, major electronics players like Samsung, Dell and Nokia have established manufacturing hubs in this region, with the government also investing $26 million in setting up an IT park in Chennai. The rise in electronics manufacturing, fuelled by India’s demand for electronic devices, saw warehousing in Chennai clock a CAGR of 22% for 2017-2020.
This has only added to the optimism around Chennai as a warehousing hub, especially with the Sriperumbudur-Oragadam cluster witnessing a significant rise in demand.
IndoSpace has firmly established its presence In Tamil Nadu with 15 industrial and logistics parks near Chennai (14 parks) and in Coimbatore (1 park), spread across 560 acres. Together these parks offer over 13 million square feet of Grade A space, including options for ready space and built-to-suit facilities. IndoSpace Industrial Park Vallam II, Oragadam III and IV are the upcoming parks in this location with a combined area of 180 acres million square feet.
Specifically, within the Oragadam micro-cluster, IndoSpace provides well-equipped infrastructure with six industrial and logistics parks catering to the needs of companies like Nissan, BMW, Bosch, Hutchinson, Kone and Nippon. Additionally, our experience in industry-specific advanced infrastructure and logistics helps us to offer built-to-suit (BTS) turnkey solutions to our clients. These range from site selection and construction to bespoke facility management services. Our BTS approach means our partners find exactly what they are looking for, giving their operations the advantage of cost efficiency.
As we begin to roll back the lockdown, economic activity is expected to rise quickly owing to pent up consumer demand and government measures to boost consumption.
The future augurs well for Chennai and the adjoining regions which will also help in bringing the economy back on the growth trajectory.