Amazon inks agreement with ESR, leases 6.06 lakh sq ft warehouse space

e-Commerce warehousing expects rising demand ahead of festive season

E-commerce major Amazon has entered into an agreement with logistics development platform ESR to lease 606,000 sq ft warehousing space at India’s biggest logistics cluster Bhiwandi in Mumbai Metropolitan Region.

The said deal is for a long-term tenure of 20 years and is expected to start in early 2022 with the agreement providing a clause for rental escalation of 15% every three years.

As per reports, the monthly lease rental is set at INR 29.2 per sq. ft for box-closed spaces, taking the total annual rental to over INR 21.23 crore.

Earlier, the e-commerce platform entered a similar long-term tenure with Xander Group’s industrial real estate platform to lease over half a million sq ft of warehousing space.

The lease which was registered last month has been inked through Amazon’s affiliate, Amazon Seller Services. And, Amazon has paid around INR 8.55 crore as a security deposit for the lease that has a five-year lock-in period. The company is likely to set up a fulfilment centre in this leased warehouse space.

According to the documents accessed through CRE Matrix, a real estate data analytics firm, Amazon’s lease commenced in April 2022. However, the agreement provides for a rent-free period of four months and therefore the rent payment will commence from August 2022.

The outbreak of the pandemic has further put the spotlight on e-commerce, same-day or next-day delivery, and the need to diversify supply chains. This has been pushing the demand for warehousing and logistics.

As per industry estimates, in the last two years, the e-commerce platform has grown its footprint many folds and almost one-fourth of the total warehousing space in India has been leased by e-commerce firms, and this trend is likely to continue due to the changing consumer behaviour and the outbreak of the pandemic.

Property consultant Knight Frank has estimated that annual warehousing transactions for the top eight Indian cities as primary markets will grow at a compound annual growth rate (CAGR) of 19% to 76.2 million square feet by FY2026 from 31.7 million square feet in FY21.

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