Online shopping boom fuels demand for warehouses

Supply of warehousing space weakened year to date and was at 15 million square feet, a drop of 20% from the same period last year

Credit: DH Graphic

Leasing of industrial and warehousing facilities rose 9 per cent in India’s top five cities so far this year on the back of strong demand from third-party logistics companies, according to a new Colliers report released on Tuesday.

This comes as more people in Asia’s third-largest economy shop for everything from gadgets to groceries online.

Also Read: India ranks 2nd for global investment in digital shopping

“Improved retail market sentiment amidst festive season and higher online spending continue to support warehousing growth and is expected to add to short-term demand addition,” the report said, adding that third-party logistics players have contributed to over half of the total warehousing demand so far.

Gross leasing in the top five cities rose to 17.5 million square feet in the nine months ending September, from 16 million square feet in the same period last year. Delhi-NCR led the pack in terms of demand and supply of warehousing space, followed by Pune and Mumbai.

Supply of warehousing space weakened year to date and was at 15 million square feet, a drop of 20 per cent from the same period last year.

Also Read: Online festive sales to grow 30% at $4.8 billion this year: RedSeer

“Global supply chain issues and rising CPI inflation has made developers sceptical of new supply despite robust demand,” Vimal Nadar, who heads the research division at the property agency, told DH via email.

Nadar also pointed to other issues such as high prices and shortage of large land parcels, higher transportation costs, poor road/rail infrastructure and unavailability of power in many suburban areas.

Last month, Prime Minister Narendra Modi unveiled a new national logistics policy that is expected to fuel the growth of warehouses and industrial parks across India.