E-commerce boom sees demand for warehouse spaces rise in Bengaluru

Developers acquiring land on the city’s outskirts where large parcels are available

August 22, 2021 10:15 pm | Updated 10:15 pm IST - Benglauru

Bengaluru, which plays host to many e-commerce giants, has seen demand for warehousing space go up.

Bengaluru, which plays host to many e-commerce giants, has seen demand for warehousing space go up.

The pandemic brought about many sweeping changes in people’s lifestyles, including a heavy dependence on e-commerce platforms, more so during the lockdown. And Bengaluru, playing host to many e-commerce giants, has seen a corresponding demand for warehousing space. The real estate sector, which took a severe beating like most others, is expressing increasing interest.

A warehousing facility is an infrastructure/domestic area for storage, sales, and distribution of goods, which reduces end-to-end transit time and supply chain costs.

Suresh Hari, chairman, CREDAI Bengaluru, told The Hindu that ever since online activity and web-based merchandising started, warehousing demand had increased.

Divergent requirements

“Since the pandemic, it has grown more rapidly, but with divergent requirements — storage of company stocks to enable easy delivery to the nearest consumption areas; distribution of stock and commodities from another city/State/country for further distribution; smaller entrepreneurs who do not have storage space, and protection of stocks from damage and pilferage,” he explained.

These facilities enable small manufacturers to keep stock in a centralised location for easy distribution and at the same time keep manufacturing activity continuing, he added.

Monica Matthias, director, Hoysala Projects, said warehousing was slowly growing due to e-commerce giants setting up offices in Bengaluru. Since the pandemic began, the warehousing segment had seen an increasing demand in Bengaluru. “I have seen emerging trends in warehousing demands post COVID-19 lockdowns. Real estate players are continuing to add more supply in 2021 to meet the needs of increasing e-commerce demand in India,” she said.

Asked what is contributing to this demand, she explained: “The demand is predominantly due to the booming e-commerce industry in Bengaluru. Existing players are looking to expand and new e-commerce players are entering the market due to the increase in online shopping induced by COVID-19 lockdowns. Also warehousing has become a promising investment opportunity for institutional investors.”

She said expecting high spurt, developers were acquiring land on the outskirts of Bengaluru to develop warehouse spaces. Bommanahalli, Bommasandra, Yelahanka, Nelamangala, and the Hoskote–Doddaballapur belt are seeing a lot of warehousing spaces primarily due to availability of large land parcels.

‘Has remained resilient’

Farook Mahmood, founder and chairman emeritus, FIABCI India, said Bengaluru’s warehousing market had remained resilient in the face of challenges thrown at it by the pandemic due to “strong occupier interest on the back of consumption-led demand from this vast metropolis”.

Key warehousing clusters — Nelamangala–Dobbspet cluster in the city’s north-west and the Hoskote–Narasapura cluster in the east — have become a cynosure in the eyes of occupiers, he said, adding that a strong consumer base coupled with government measures in the form of GST had already facilitated a steady infusion of industrial and warehousing parks in the Bengaluru Metropolitan Region (BMR) in the past few years. “Key manufacturing hubs next to the National Highway 4 provide port connectivity via Mumbai and Chennai and are much sought after warehousing belts in the region today. Additionally, the southern belt of Attibele–Bommasandra is also an emerging warehousing location to cater to the nearby tier-II and -III towns,” he said.

According to Mr. Mahmood, while demand in other commercial real estate segments had been impacted in the last few quarters, the warehousing market had emerged as a standout led by e-commerce and third-party logistic growth. “This is largely attributed to a sudden surge in the need for extra storage/warehousing space by many occupiers during the first wave as closure of State boundaries required additional facility arrangements for last-mile deliveries, something which proved advantageous for companies to expand and cater to this new demand wave. E-commerce accounted for 22% share; however, it is evident that the real pent-up demand from e-commerce giants is yet to translate into new warehousing space take-up once decision-making is fast tracked. Retail and FMCG accounted for 5% and 4% of the space consumed respectively,” he said.

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