Page 8 - ITLN May - June 2022 issue

Cover Story
Warehousing

Market Report 2021 estimated that
the annual warehousing transactions
for the top eight Indian cities (primary
markets) will grow at a compound
annual growth rate (CAGR) of 19% to
76.2 mn sq ft (7.08 mn sq m) by the
financial year (FY) 2026 from 31.7 mn
sq ft (2.95 mn sq m) in FY 2021.
As per the projections shared by the
consultancy for the next 5 years (FY 2022
– FY 2026), the e-commerce segment
is expected to take up significant space plumbing and fixtures. Additionally,
estimated to be 98 mn sq ft (9.1 mn Covid-19 has caused a significant
sq m) approximately registering an shift in construction costs, resulting in
increase of 165% from the preceding slightly higher material costs and supply
period of FY 2017 – 2021. chain disruptions. When compared to
Third-Party Logistics (3PL) and other its international counterparts, general
sector companies are expected to take manufacturing in Indian cities range
up 56% (83 mn sq ft) and 43% (53 mn from $ 453- $465 per sq. m whereas for
sq ft) more space respectively, over the Grade-A warehousing it ranges from
same reference period. $291-$299 per sq. m as of Q1 2022.
While the warehousing industry Srinivas N, Managing Director,
in India is currently centered around Industrial and Logistics, Savills India said
Tier-1 cities like Mumbai, Kolkata, in a release, “Industrial and warehousing
Bengaluru, Chennai, Delhi-NCR, Pune, The government is also is one of the most resilient segments
and Hyderabad but with rising demand planning to introduce a in India. The demand for industrial and
from e-commerce and quick commerce, warehousing policy to warehousing facilities is expected to
it looks like tier 2 and 3 cities are also help ease transportation remain unscathed in the long term. We
seeing some of this growth now. and logistics costs. It expect construction costs for industrial
As per the report, warehousing and warehousing projects to increase in
demand in secondary markets has aims to lay the roadmap 2022. However, the magnitude of growth
grown 31 percent y-o-y compared for developing exclusive is dependent on material costs, labour,
to a 23 percent y-o-y de-growth for warehousing zones equipment rental costs, interest rates,
primary markets, in FY 2021. Among the through public-private and other related costs.”
secondary markets, Indore and Jaipur partnerships. • On-Demand Warehousing
noted exponential growth of 306 percent With India’s warehousing sector
and 219 percent respectively in FY 2021. Sundaresan gradually picking up pace with
A significant development in the Vaidyanathan massive investments, the on-demand
April-June 2021 period was the $700 Welspun One Logistics Parks warehousing segment seems to be
million deal in May when private equity growing. “Everyone is moving to the D2C
major Blackstone announced the project is a 110-acre logistics and industrial model and to facilitate quick deliveries,
acquisition of Embassy Industrial Parks, park development at Palava, Mumbai. on-demand warehousing is a must.
a JV of Warburg Pincus and Embassy To facilitate the consumers on time
that controls 22 million sq ft of Grade-A Emerging Trends In Warehousing or rather before time, everyone has
warehousing in major industrial hubs • Spurt In Grade A Facilities started adopting micro warehousing
including Bangalore and Delhi. In its April report earlier this year, models too,” Harshad Vagdoda, Head
Earlier this April, FM Logistic, a Savills India estimated that in the first of Innovations & New Engineering,
French third-party logistics (3PL) quarter of 2022, Mumbai and Kolkata Vinculum Group told Indian Transport &
company, opened its first owned witnessed the highest construction Logistics News (ITLN).
multi-client facility in Farrukhnagar, costs at Rs 2,115 per sq. ft. for grade-A There is a move towards built to
Haryana, which is part of the $150 warehousing space and Rs 3,295 per sq. suit model of warehouses says Abhijit
million investment plan it announced ft. for a general manufacturing facility. Verma, Executive Director and CEO
in March 2019. This was followed by Pune which saw of Avigna Group who told ITLN, “The
Later in May 2022, leading Indian real the costs at Rs 2,100 and Rs 3,265 per changing technical specifications of
estate developer Lodha announced a sq. ft. respectively. the client, be it in the size of the boxes
$1 billion ‘Green Digital Infrastructure Construction costs have increased due due to increasing total square feet
Partnership’ with real estate industry leader to rising material prices such as crude requirement from 40K on an average
lvanhoé Cambridge and global private oil, steel, aluminum, cement, labour, up to 8 lakh square feet or the height
investment firm Bain Capital. Their first equipment rental costs, and costs of requirements changing from 8 meters
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