Demand For Logistics Parks and Warehousing Booming In India

Some of the biggest global players in infrastructure development and private equity investments are jostling to gain and consolidate their presence in key economic clusters by establishing industrial parks and logistics hubs across the country.

Last year recorded industrial and warehousing lease transactions increased by eight per cent on the previous year to touch a record 39 million square feet across eight major cities in the country, according to property consultant CBRE South Asia. The total supply of industrial and logistics space also touched a record peak of 36 msf.Year 2023 also recorded private equity inflows more than doubling into the segment to around $900 million, the second highest after the office segment.

US-based private equity giant Blackstone, Asia Pacific’s largest real estate asset manager ESR group, Singapore-based CapitaLand are some of the global names that are investing in setting up and developing integrated industrial and logistics parks.

There are domestic companies too such as Everstone-backed IndoSpace, Mumbai-based Lodha group and the TVS group in the south that already own millions of square feet in warehousing space and are investing billions of dollars to set up integrated parks that serve as manufacturing, storage and distribution centres.

The demand for warehousing space is being driven by third party logistics players, who accounted for 45 per cent of the leases.

According to CBRE, the drift towards more structured operational models of industries such as retail, FMCG, and manufacturing is “driving an increased demand for efficient last-mile delivery solutions and warehouse solution providers are actively exploring markets to meet this demand.”Diverse sectors, including e-commerce, retail, and manufacturing, are outsourcing their supply chain operations to 3PL firms to meet storage requirements, increase flexibility, and reduce costs.

Government initiatives such as Multi Modal Logistics Parks, electric mobility and giga factories and rise of quick commerce will be growth drivers for warehouses in the near and medium term.

Consolidation in the sector is also on the cards and this will lead to institutionalisation, Colliers pointed out, paving the way for new technologies and REITs.