Real Estate

Warehousing within city limits, a big opportunity for real estate post Covid

Anil Urs Bengaluru | Updated on April 21, 2020 Published on April 21, 2020

Multi-level warehouses within city limits may well be Indian real estate’s next big opportunity in a market completely transformed by the Covid-19 pandemic.

“The compulsions of faster e-commerce growth in a post-pandemic world can kick-start demand for tech-enabled multi-storey warehousing. Such solutions are already in place in South Asian countries such as Hong Kong, Singapore, South Korea and Tokyo,” said Santhosh Kumar, Vice-Chairman, Anarock Property Consultants.

“Currently, warehouses in the leading Indian cities are largely restricted to the city peripheries and far from the larger customer base. Covid-19 has already underscored the importance of e-commerce in the ongoing lockdown. With an uncertain post-pandemic future looming over the retail sector, retail players may now need multi-level warehouses within city limits to service cities,” he added.

Besides facilitating maximum land utilisation in cities like Mumbai, multi-storey warehousing can help companies to reduce transportation costs and improve delivery time — two keys to success for most retail businesses. With technology as an enabler, such options can replace multiple single-storey warehouses on the city peripheries and thus save on overall operational and occupancy costs.

Kumar said: “Today, fast delivery is a crucial requirement for the seamless omni-channel strategy of e-commerce players. The fallout of the coronavirus pandemic can exceed the current lockdown and social distancing may become the new normal, at least over the mid-term. In such a market environment, retailers will be under pressure to secure warehousing locations close to their customer base.”

He further said: “Solutions like multi-storey car parking are already firmly in place in India’s most crowded and land-starved cities. Multi-storey warehouses of five or more storeys with tech-enabled loading on every floor are the next logical move.”

Top trends in warehousing

Even before Covid-19 and the unique imperatives the pandemic has called forth, structural reforms such as GST implementation and infrastructure status for the logistics sector, coupled with the rapid growth of e-commerce, ushered in a new growth chapter for the Indian warehousing and logistics industry. Besides e-commerce, other sectors driving demand for warehousing include FMCG, engineering and manufacturing, and third-party logistics.

Government impetus: Budget 2020 packed several major announcements for the warehousing sector, including a plan to build a seamless national cold storage chain. The government also plans to create warehousing in line with Warehouse Development and Regulatory Authority (WDRA) norms. The National Bank for Agriculture and Rural Development (NABARD) will map out and geotag warehouses and cold storages.

Digital technology improving efficiencies: Like other sectors, logistics and warehousing also leverages technology to achieve better efficiency and lower dependence on manpower. Many warehouses now use software that improves fleet management via live tracking of goods, RFID (Radio Frequency Identification) systems for inventory identification, automated pallet storage, etc.

Demand in Tier-II cities: The primary demand for warehousing is currently concentrated around top cities like Delhi NCR, Mumbai, Bengaluru, Chennai and Pune. Due to its locational and distribution advantage, Kolkata has also emerged as a warehousing and logistics hub in the east. However, the proliferation of e-commerce in smaller cities has kick-started a growing demand for warehousing in Tier-II cities such as Jaipur, Ludhiana, Coimbatore, Lucknow and Guwahati.

Published on April 21, 2020

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