E-commerce growth creates robust demand for warehouses around Chennai

Over the last two years developers have been expanding their footprint to second tier cities of Madurai, Coimbatore and Salem; State’s strong connectivity is cited as the reason for the fast growing infrastructure

May 28, 2023 09:27 pm | Updated 09:27 pm IST - CHENNAI

The developers of warehouses have been looking to expand their footprint in tier-2 and tier-3 cities in Tamil Nadu.

The developers of warehouses have been looking to expand their footprint in tier-2 and tier-3 cities in Tamil Nadu. | Photo Credit: SPECIAL ARRANGEMENT

The demand for warehousing spaces in Tamil Nadu is rising and newer locations are emerging in this space.

In Chennai, there is demand for warehousing spaces in locations such as Orakkadu near Ponneri, Sholavaram, Red Hills to Tiruvallur Road and Minjur. Apart from this, over the last two years developers have been expanding their footprint to second tier cities of Madurai, Coimbatore and Salem, according to details provided by Jones Lang LaSalle.

“3PL and E-Commerce have emerged as one of the fastest growing segments in  warehousing  space, contributing highest among all the other sectors,” said Jerry Kingsley, Head, Strategic Consulting and Valuation Advisory India & City Lead Capital Markets – Chennai, Jones Lang LaSalle.

Mr. Kingsley said that over the last few years, key global funds have been actively partnering with regional warehouse developers and operators to expand their portfolio and footprint. “Such investments are not restricted to tier 1 cities but also tier-2 and tier-3 cities, with these cities now emerging as major consumption and e-commerce hubs,” he said.

Sanjay Chugh, City Head and Senior Vice President, Chennai – ANAROCK Group, said: “Due to the State’s strategic location, strong connectivity, and fast growing infrastructure, Tamil Nadu has a number of new areas for warehouse spaces.”

He said: “One of the significant emerging locations in this respect is Oragadam on the outskirts of Chennai, which has good access to important transport hubs, including the Chennai-Bengaluru and Chennai-Tirupati highways.”

Mr. Chugh highlighted that Hosur, on the border of Tamil Nadu and Karnataka, is growing quickly because of its good access to the railway line between Chennai and Bengaluru and the Bengaluru-Chennai motorway. Various logistics companies are establishing warehouses and logistics facilities at Tuticorin to serve the expanding import and export activities of the port, he said.

Mr. Chugh said a significant demand for warehousing and logistics services is being driven by the State’s expanding industrial and export sectors. Also with its expanding consumer base, Tamil Nadu is turning into a crucial market for e-commerce businesses. This is fuelling the demand for logistics and warehousing facilities that can accommodate the rising number of small packages, he added.

Recently, GRT Group has collaborated with Welspun One Logistics Parks (WOLP), an integrated fund and development-warehousing platform to develop two Grade-A warehousing projects in Tamil Nadu. The first project is being developed through a 50:50 joint venture between GRT Group and WOLP. The second project is being developed by WOLP for GRT Group under a “development management” agreement. Both projects are located on NH 16 (Chennai-Kolkata Highway).

Anshul Singhal, Managing Director, Welspun One Logistics Parks, said: “The two projects have partially commenced as all the required approvals are in place. They are expected to be completed in 3 to 4 years. With the State’s aim to becoming a 1$ trillion economy, the scope of the warehousing market has widened considering exponential industrial growth.”

NDR Warehousing, which currently has around 8 million square feet of warehousing space across Tamil Nadu, is expanding its base. Raj Srinivasan, Regional Head, South India, NDR Warehousing, said: “We are strategically expanding our footprint in Tamil Nadu to meet the growing warehousing needs of our clients. We have allocated around half a million square feet of warehousing space in the north of Chennai and Oragadam, respectively.”

Real estate observers said Tamil Nadu government has been actively encouraging the development of warehousing and logistics sector. To attract investment, the government has taken several initiatives, including the construction of logistics parks, the establishment of a single-window clearance system, and is offering financial incentives.

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