Mumbai : The growth in India’s logistics and warehousing industry has been fuelled by encouraging developments in the retail, e-commerce and manufacturing sectors according to the findings of CBRE’s latest report, “India Logistics Market View H1 2013”. As per the report, the first six months of the year continued to see automobile players, FMCG companies and retail majors as the prime occupiers of warehousing space; while the preferred expansion mode for most corporates remained Built-to-Suit (BTS) facilities in the range of 100,000–150,000 sq.ft.

Mr. Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia Pvt. Ltd says, “In the coming months, India’s logistics industry is likely to attract demand from companies keen on expanding their warehousing footprint. We can also expect a supply addition in various cities, which may result in a marginal rental rise in select locations. The recent relaxation of FDI regulations in the retail sector is also expected to create substantial demand for logistics and warehousing services across the country.”

The NH-8/Gurgaon (Haryana) continued to enjoy its position as one of the most preferred locations for large warehouse developments or Regional Distribution Centres (RDCs) in the NCR. Other emerging locations in H1 2013 for new warehouse developments in the region were Luhari, Kulana (NH-71), Sohna Taoru Road (NH-71B), Taoru, Khajuri and Farukhnagar. Although no new Grade A warehouse space was added during the first six months of 2013, there was significant addition of Grade B supply from local developers. Lack of quality supply led to a rental drop of 23–24% in the micro-markets of Akbarpur and Saboli, and to that by 17–18% in the NH-8/Gurgaon area, over H2 2012.

The high cost of land at the established logistics hubs of Mumbai’s Bhiwandi and Panvel areas are beginning to drive demand to the city’s western suburbs of Virar and Vasai, as well as towards Nashik on NH-3. Demand for quality warehousing from cash-and-carry retailers, keen on expanding their footprint in the city, is likely to witness an increase in the next few months.

Bangalore witnessed resilient demand for warehousing space during the first half of 2013, with quite a few occupier enquiries likely to convert into transaction closures within the coming months. BTS formats remained the preferred development mode for warehouses larger than 50,000 sq.ft.; and the trend is likely to follow ahead. The second half of 2013 is likely to see a marginal increase in rental values, owing to rising demand levels for warehousing space in Bangalore.

Rentals are expected to remain stable on the back of steady demand and abundant supply across the warehousing hubs of Chennai, Hyderabad, Pune and Kolkata. While FMCG companies and e-retailers are the major demand drivers for quality logistics spaces in Chennai, Pune attracts more attention for industrial space from engineering and automotive companies.

Source : Naresh Sharma