E- Commerce emerges as second largest sector for warehousing demand: CBRE

New Delhi, July 9 (KNN) According to the latest report from CBRE, Online Retail Driving Realty - Part 2, e-commerce has emerged as one of the main drivers for warehouse realty demand across the country after Third Party Logistics (3PL) operators (30% share during 2015).

The e-commerce sector, according to the report, is currently witnessing a lot of active interest from investors. The report also states that approximately 2 million sq. ft. of warehousing space was taken up by e-commerce firms in 2015. This is a significant jump as the share of the sector rose from a meager 2% of the total warehousing demand in 2012, to around 22% during 2015. On the same lines, office space demand from e-commerce firms witnessed a 170% year-on-year growth—from 0.7 million sq. ft. in 2014 to 2 million sq. ft. in 2015.

Commenting on the report, Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia Pvt. Ltd. said, “Investors have begun to show more interest as the growth story of the sector continues. The sector saw significant activity during 2015, mainly driven by existing e-commerce companies looking to ramp up operations, while new players entered the market. Along with e-tailing groups (companies or organizations), substantial funding also flowed into the e-commerce logistics segment, which registered investments of close to US$ 262 million during 2015.”

Between 2010 and 2012, the average demand for warehousing space was just about 4.5 million sq. ft. With the emergence of the e-commerce segment in the country, modern warehousing space leasing increased to approximately 7.7 million sq. ft. during the 2013–15 period. Along with leading urban centers, smaller Indian cities such as Jaipur, Ahmedabad, Nagpur, and Mangalore, among others, saw e-tailing firms establishing their fulfilment centres (FCs) here. Tier II locations such as Ludhiana, Surat, Ahmedabad, and Jaipur are currently attracting the next phase of leasing activity. On an annual comparison, warehousing space leasing surged by more than 200% in these smaller locations. This was largely driven by the need to improve operational efficiencies and increase the customer base.

“As competition becomes fiercer and buyer expectations increase, e-commerce majors will have to consider multiple factors such as the quantum of investments in asset improvement, expansion possibilities, rental and other associated commercial terms to determine their optimal real estate strategy. Developers on the other hand, will need to monitor the market carefully to ensure that the right kind of supply at the right price is available for the occupiers.” said Jasmine Singh, Executive Director (Head – Industrial & Logistics Services), CBRE South Asia Pvt. Ltd. (KNN Bureau)