3PL and e-commerce the largest warehousing occupiers; almost 75,000 acres industrial areas coming up across India
There are over 110 mn sq ft of Grade A warehousing stock available across the country. Most of it in the top eight cities and third-party logistics and e-commerce are the largest occupiers of warehousing space.
There is also a massive opportunity for Grade A warehousing development in the smaller cities amidst rising demand.
The emerging tier 2 and 3 hubs include Ludhiana, Ambala, Lucknow, Siliguri, Guwahati, Bhubaneshwar, Vishakhapatnam, Vijaywada, Coimbatore, Kochi, Nagpur, Indore, Jaipur and Dholera, a new report ‘Indian Industrial & Logistics – Gearing Up a Global Manufacturing Hub’ by US-based Binswanger Commercial Real Estate Services and ANAROCK Group said.
Around 3,400 industrial clusters over 4.6 lakh hectares in India have only a 25 percent vacancy. As many as 10 industrial regions across India country drive manufacturing growth, the report said.
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There are around 75,000 acres of industrial areas planned across India’s top cities, including Dholera-SIR at Ahmedabad (22,734 acres), Pharma City (19,333 acres), and Zaheerabad NIMZ (12,635 acres) at Hyderabad, among others.
The report also highlights that nearly 7 bn dollar worth platforms have been created for the warehousing sector since 2015. Over 2 billion dollars in PE investments have been infused in the industrial and logistics sector between 2017 and Q1 2020. Investors are upbeat in this sector and are working closely with developers to identify warehousing investment opportunities.
“COVID-19 has exposed the challenges of consolidation within the warehousing sector. The market is expected to de-centralize to mitigate future disruption, ensure business continuity and ease operations. To contain costs and maintain social distancing norms, automation will become a major focus area,” said Jeff Binwanger, managing partner, Binswanger International.
E-commerce will also flourish in the post-COVID-19 era, giving an edge to online businesses which will eventually boost new warehousing demand - particularly multi-level warehouses within city limits, he said.
The current government has created a fertile arena for growth, with the total approvals needed to set up a warehouse in India reducing from 33 in 2015 to 15 by 2019-end.Likewise, the time taken to construct a warehouse has reduced to 3.5 months from the previous 6 months during the same period. Meanwhile, India’s high logistics cost – at 14 percent of its GDP - is still better than China’s 15 percent.