As per commercial real estate services market reports in India, the number of Grade A warehouses being leased has evolved from covering about 7 million square feet in 2014, to now over 10 million square feet in 2017. This is a testament to the rapid momentum at which the demand for warehouse facilities is increasing in the country. Traditionally, industries dealing with automobiles, engineering, chemicals, metals, textiles, etc. have been known to employ the use of warehouses as they need large storage spaces to support production. However, in our current age of consumerism coupled, the phenomenon of the Internet has resulted in a large consumption of warehousing real estate is by E-commerce businesses and other transportation companies that work to assist them. Logistics and supply chain management are primarily driving the demand for warehouses and occupy a major percentage of warehousing facilities.
Even though the existence of bricks-and-mortar stores is being threatened by the explosion of online retailers, the demand for warehousing is providing an alternative route for capital investment that is less publicly prominent in the commercial real estate sector. Warehouses servicing the supply chain of the E-commerce industry are very different from the pre-existing ones that were supporting standalone manufacturing units. The new requirements need to bolster a larger workforce, sometimes smaller, but fast moving, quantities of goods and have to be conveniently located for faster deliveries. This is propelling the employment of designers and builders to generate these customized spaces, thus creating employment opportunities on multiple levels.
After international and local online retail giants like Amazon, Snapdeal and Flipkart have entered the market, and become responsible for major hikes in warehouse leasing, significant progress has been made by the government to assist the on-the-ground operations of these businesses. As the National Highway Development Program is executed and Dedicated Freight Corridors are established, the demand for warehousing facilities is set to align itself with this development. This demand is also set to rise once the proposed Goods and Services Tax (GST) is implemented. The combination of improved transportation facilities, robust infrastructure, and better quality warehousing, is poised to ensure the speedy growth of Indian logistics.
The exponential potential for the growth of E-commerce driven businesses in India, also helped by the government’s Make in India initiative, will continue to drive the transformation of the Indian Logistics Sector. Greater efficiency at lower costs and a healthy competitiveness are the by-products of these developments that is fuel to the fire of a young, entrepreneurial, and well-connected working class.