Demand for Warehouses in small cities rise as e-commerce firms target quicker delivery

Indian warehousing industry will witness multi-level warehouses mushrooming in metro cities as e-commerce players look for quicker deliveries and space scarcity in Delhi and Mumbai inhibits warehouse developers to acquire large land pieces.

Logistics developer ESR, a venture of private equity firm Warburg Pincus and global investors, said that it has identified spaces in Delhi and Mumbai and will finalise a site this financial year to build a multi-level warehousing.

“We have seen states closing borders to reduce the impact of pandemic and at a place like NCR, where there are three different state governments, it is important to have presence in the heart of the city for faster delivery,” said Abhijit Malkani, country head of ESR India.

According to property consultant Anarock, with an uncertain post-pandemic future looming over the retail sector, retail players may now need multi-level warehouses within city limits to service cities.

“The compulsions of faster eCommerce growth in a post-pandemic world can kick-start demand for tech-enabled multi-storey warehousing. Such solutions are already in place in South Asian countries such as Hong Kong, Singapore, South Korea and Tokyo,” Anarock had said in a recent report.

Currently, warehouses in the leading Indian cities are largely restricted to the city peripheries and far from the larger customer base.

Besides facilitating maximum land utilisation in cities like Mumbai, multi-storey warehousing can help companies to reduce transportation costs and improve delivery time – the keys to success for most retail businesses.

“Multilevel warehousing is required at densely populated cities, and in Asia it is restricted to very few cities. But in India, discussions have started and have occupied mindshare but I still think it will be a while before we see multilevel warehousing,” said R K Narayan, Chief Operating Officer, Allcargo Logistics and Industrial Parks.

According to a Knight Frank India report, warehousing demand in India has seen strong growth over the last few years and has recorded a 44% increase in CAGR since 2017.

At present, about 21,163 acres of land is committed for warehouses in the country, which has the potential of adding 63% more supply to the existing 307 million sq ft of warehousing stock.

The fallout of the coronavirus pandemic can exceed the current lockdown and social distancing may become the new normal, at least over the mid-term. In such a market environment, retailers will be under pressure to secure warehousing locations close to their customer base,” Anarock said.

 

Source : https://economictimes.indiatimes.com/industry/services/property-/-cstruction/demand-for-warehouses-in-small-cities-rise-as-e-commerce-firms-target-quicker-delivery/articleshow/77764659.cms

Date : Aug 26, 2020

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