The spectacular growth exhibited by the retail, ecommerce, grocery firms and third-party logistics providers have spurred up the demand for last mile deliveries, forcing top warehousing developers to ramp up their expansions in the tier-II locations and within metros.
Aiming to have a better reach to the consumer, operators and investors such as ESR, LOGOS, Blackstone-led Horizon Industrial Parks, and Welspun One Logistics Parks (WOLP) are actively eyeing land acquisitions in smaller cities and vying for first mover advantage in setting up multilevel in-city logistics hubs.
With focus on tier-II cities, ESR is currently in advanced discussions to acquire 3-4 land parcels. The company kicked off its urban logistics plan with the acquisition of 8.2 acres of land in Alipur, Delhi, to establish a distribution centre spread
across 300,000 sq ft to cater to e-commerce, grocery, pharmacy, cloud kitchen, and other companies.
“2021 was a mixed bag, with lot of leasing in e-commerce but slowdown in industrial. In the last six months light manufacturing and industrial sectors have revived. We are looking at significant expansion this year, incl-uding in tier-II markets, which have become important because of e-commerce penetration. Our strategy would be to build more plug-and-play (warehousing) facilities, which help customers to go live in three months,”Abhijit Malkani, chief executive officer (CEO), ESR India.
Warehousing has been a sweet spot for the real estate industry during the pandemic largely because of the e-commerce boom. According to JLL India, the cumulative warehousing supply in the top 8 cities was 287 million sq ft in 2021-end and is expected to touch 500 million sq ft by 2025.
Logistics Operator, LOGOS in 2021 signed 1.8 million sq ft new leases and delivered 2 million sq ft, leaving a few land acquisitions incomplete due to the challenges that came as a result of the covid-19 pandemic.
“We want to expand in eight cities, but also beyond them and look at in-city logistics. The challenge in in-city logistics is fragmented real estate ownership and high values, but we are keen on exploring the space. There is demand and it will be led by e-commerce and quick commerce firms, but there may be a constraint in supply,”Mehul Shah, CEO, LOGOS India
LOGOS plans to build another 2 million sq ft by 2022-end and may acquire a ready portfolio of one or two million sq ft.
Blackstone has also set up a logistics vertical ‘Horizon Industrial Parks’ in India to house its existing assets, which will be scaled up through acquisitions and greenfield developments. The company in a time span of over 18-24 months, plans to double its portfolio in and around large cities and selectively in smaller cities.
“We aim to buy land in Siliguri, Jaipur, Coimbatore, Bhubaneswar, and Guwahati. We are exploring in-city development but it will take more time to catch up. The future of shopping is hybrid, so there would be a lot of last mile delivery requirement but it’s a different product,”Anshul Singhal, managing director, WOLP
“We believe the packaging sector can be a major demand driver in 2022, while leasing by e-commerce firms may moderate because they have committed to a lot of space last year,” said Chandranath Dey, head of operations, business development, logistics and industrial, JLL India.
Source: Live Mint