Ecommerce Emerges As Major Driver For Warehousing Space: Study

While logistics undertakes the critical role of connecting production centres to consumption markets, inefficiencies in managing it could lead to a severe disruption in the entire supply chain network. In India, the experience pertaining to this sector has not been very encouraging, leading to colossal losses during the transportation, distribution and storage of goods. Thus, any effort towards addressing this problem will meet with much appreciation. E-commerce has emerged as a major driver for warehousing space in the National Capital Region (NCR), a report by real estate consultancy Knight Frank India said.

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Historically, warehousing activities in NCR have been concentrated in the peripheral areas of New Delhi, such as Alipur, GT Road, Kapashera, Bamnoli, Dhulsiras and Okhla, with godown-type structures dominating the landscape. As land prices became unfeasible for such activities, they slowly started shifting outside the Delhi border. The region’s total requirement for warehousing space, as of April 2016, is estimated to be 223 million sq ft. “Out of this, the leasable market is pegged at around 120 million sq ft,” it said.

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NCR is one of the largest manufacturing hubs in the country and accounts for the majority of the production activity in north India. Food processing, which includes dairies, rice mills, sugar mills, confectioneries, and alcoholic and nonalcoholic beverages, among others, has the largest share in the output in NCR. While the manufacturing sector contributes to more than 80 per cent (187 million sq ft) of the total space requirement, the remaining 20 per cent (36 million sq ft) of the demand comes from the retail sector.

“E-tail is emerging as a major driver for warehousing space,” the report said, adding that from five million square feet currently, the demand by e-commerce is expected to increase 60 per cent to eight million sq ft by 2020.

Samantak Das, Chief Economist & National Director- Research, Knight Frank India, said: “With a renewed focus on manufacturing and infrastructure development, the warehousing sector has shown tremendous traction in the last couple of years. Added to this is the boom in the consumption and e-tail sectors. We believe that this sector is going to experience a sea change in its structure and will open up opportunities for real estate players.”

Moreover, at 16 million sq ft, apparel, sportswear and footwear categories account for the largest share (43 per cent) in demand for warehousing space within the retail sector, the report stated.

As much as 80 per cent of NCR’s total warehousing requirement is catered to by the NH-8 and Ghaziabad warehousing clusters.

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