Demand for quality warehouses rising rapidly, says report

There is a spurt in demand for logistics and warehousing space in not just key metros but also in leading tier-II cities.

CBRE, the global commercial real estate services firm, in a recent report titledIndia Logistics Market View has found that India witnessed increased market activity in first half of 2012.

e-tailers invested heavily in strategically located assets and have been taking up quality warehousing space across India, primarily in NCR, Mumbai and Bangalore.

However, the availability of large land parcels at relatively low costs, connectivity to multiple markets across States and location of industrial clusters has led to the emergence of some tier-II and tier-III cities as favoured destinations for the development of logistics parks and warehouses.

Rental values witnessed growth across most micromarkets due to the higher demand for warehousing and logistics facilities. The coming months are likely to witness additional supplies across cities, which will positively affect transaction activity in these locations.

Anshuman Magazine, CMD, CBRE, South Asia said, “The rising level of activity in logistics and warehousing space across metros as well as tier-II cities is testimony to the growing confidence of domestic and international retailers in India. Factors such as enhanced connectivity, implementation of various reforms and completion of major infrastructure projects are expected to further augment the logistics sector across India. Going forward, there will be significant reorganisation in the warehousing industry and network planning by organisations in the country.”

FMCG majors, white goods and consumer electronics firms are also on an expansion spree and are steadily increasing their footprint across the country. Built-to-suit options have been the preferred mode of expansion for most occupiers, with large-sized transactions of around 10,000–15,000 sq ft of warehousing space being reported in the first half of 2012.

A large number of domestic developers are moving up the value chain by taking initiatives to provide modern logistics parks with quality warehouse facilities. They are also building assets with better specifications and support infrastructure