It’s a boom time for storage spaces

India’s warehousing sector is witnessing an exponential growth, thanks to the rising e-commerce segment, increased automation and robust manufacturing growth. This has opened up new and exciting opportunities for stakeholders in the sector with new concepts like multi-use facilities and consolidation of smaller spaces into larger integrated facilities.

The growing acceptance of warehousing as a specialist sector is leading to several industrial houses opting to outsource their goods storage requirements. It also results in the monetisation of non-core assets such as, the lands of industrial houses.

Growing demand

TVS Industrial and Logistics Parks, the oldest, and one of the leading players in the organised warehousing space in the country is also cashing in on the current trends by setting up industrial parks across the country.

Manikandan Ramachandran, the company’s Chief Operating Officer is bullish on the business potential of industrial parks especially when considering the India Warehousing Market Report 2021, that indicated a 19 per cent growth in annual transactions in the sector, more than doubling to 76.2 million sq ft in the FY 26 from 31.7 million sq ft in FY 21.

The e-commerce sector, he said, will drive the bulk of the volume, as the accelerated growth trajectory that the pandemic pushed the sector toward is expected to sustain. “Today there is a growing effort to improve the utility of space in the parks as much as possible given the escalating land prices,” he adds. The company has more than doubled its footprint in the last one year to 6 million sq ft as of March 2022. “We have lined up investments worth $500 million over the next 4-5 years to set up 25 industrial parks across the country,” he said.

Setting up new spaces

Sree Kailas Group, a leading player in industrial and logistical parks in South India, has already established more than 2 million sq ft of warehousing space in Chennai, Kochi, and Coimbatore. They have plans to establish logistics parks across Tier I cities like Chennai and Hyderabad, and Tier II cities such as Madurai, Salem, Trichy, Coimbatore and Hosur.

“We are in the process of setting up a warehousing and industrial space at Sunguvarchatram near Sriperumbudur at an investment of ₹150 crore,” said its chairman S Rajkumar. The location, with its proximity to Oragadam — the auto hub of India — has a great scope for setting up the next generation of Grade A industrial and logistics parks, catering to the requirements of FMCG, e-commerce and industrial users, he said.

E-comm’s warehousing needs

A spokesperson of Allcargo group said that, the warehousing segment has increased demand from e-commerce companies. As more people from Tier II and Tier III cities are opting for online shopping, warehousing footprints are witnessing steady growth across the country driven by the e-commerce demand.

The e-commerce players are building warehousing capabilities to meet the growing service delivery needs and to manage the supply chain dynamics efficiently.

Asked on the slowdown impacting the business of warehousing spaces, Ramachandran of TVS Industrial and Logistics Parks said that, the warehousing sector continues to grow, and it is also not facing any challenges in getting new customers or financing for setting up warehouses. “It must be remembered that warehousing is not a luxury item where spending can be avoided. Warehousing is necessary for storing goods and maintaining the whole supply chain,” he added.

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