Lucknow is emerging as one of the key industrial and logistics (I&L) hubs in northern India after Delhi-NCR with Rs 400 crore of investments over the last five years, according to a report by CBRE.
The investments came from leading players like Amazon, Mondelez and Flipkart, and an additional Rs 70 crore investment is expected in the development of warehouses in the city, the report added.
The total leasing of warehousing space in the Lucknow region in 2022-23 stood at 0.18 million square feet from 0.11 million square feet (msf) in the previous year.
Currently, the Lucknow region has a total of 5.2 million square feet of warehouse stock with about 1.4 million square feet of Grade A supply in the pipeline on the Lucknow-Kanpur highway cluster.
According to estimates, the sector has the potential to generate direct employment of about 70,000, with an additional 35,000 jobs in allied activities such as transportation and external vendors in the next five years.
The capital city of Uttar Pradesh is one of the most important consumption markets in the state and is strategically located with seamless access to east, west and central India, emerging as one of the largest logistics hubs of northern India, the report added.
"Robust occupier demand has pushed transactions volume to 0.18 million sq ft. E-commerce players have been the mainstay of the Lucknow market since the turn of the decade, but majorly 3PL companies led the occupier demand in FY23. With new parks being built and developed, the overall macro environment in terms of road connectivity, new residential developments, and commercial activity around the areas will also improve," Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE, said.
Increased warehousing demand
The increased warehousing demand has led giants like Amazon, Mondelez, Flipkart, Tata Croma, Airtel, DHL, Whirlpool, Delhivery, Ecom Express and Mahindra Logistics to set up their warehousing facilities in the region.
Currently, a few developers, including Welspun, BG Link, Nanak Logistics, and Reciprocal, constitute the Grade A warehousing landscape in the Lucknow warehousing market.
CBRE said it had facilitated Mondelez (100,000 square feet), Amazon (415,000 sq ft) and Mahindra Logistics (75,000 sq ft) in the development and leasing of warehouse space in and around the city.
According to the report, the growth of warehousing in the Lucknow region to the availability of reasonably priced land parcels, good road connectivity, and benefits of industrial land use classification under UP State Industrial Development Authority (UPSIDA).
The multi-city metro rail projects coming up at Lucknow, Kanpur, Meerut and Varanasi, and the upcoming international airport at Jewar and a new airport in Kushinagar are adding strength to the state's connectivity advantage, it added.
Pan-India leasing
On a pan-India basis, continued leasing momentum in the I&L sector is likely to bring overall space take-up at par with the 2022 level.
The I&L sector’s report (April 2023 -June 2023), shows that leasing grew by 22 percent YoY to 17.2 msf in H1 of 2023. Supply during this period increased by 68 percent Y-o-Y to 16.7 msf.
During the January-June 2023 period, Mumbai drove absorption activity, with the leasing of 4.0 msf, followed by Chennai at 2.9 msf and Bangalore at 2.3 msf.
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