Indian Warehousing Market

Present and Future

July 2022

The Associated Chambers of Commerce and Industry of India

Indian Warehousing Market
Present and Future

July 2022

The Associated Chambers of Commerce and Industry of India

4th Floor, YMCA Cultural Centre and Library Building
01, Jai Singh Road, New Delhi-110001
Tel: 011-46550500 (Hunting Line) • Fax: 011-23017008, 23017009
Web: www.assocham.org
 Deepak Sood
Secretary General, ASSOCHAM

Message
India is one of the fastest growing economies in the world, with promising business
opportunities. The Government of India has taken various proactive and conducive business
initiatives. Over the years, the warehousing industry in India has evolved from mere storage
space to highly sophisticated warehousing and logistics systems. Backed by the continuous
expansion in the manufacturing sector and increased private and foreign investments,
warehousing demand in India is on the rise. Warehouses have become one of the most crucial
elements of the Indian logistics industry.

India’s opportunities in warehousing are riding on the growing demand of E-retailers looking
forward to opening up warehouses in tier I and tier II cities as well as collaborating with
logistics service providers across the country. The warehousing industry in India is largely
unorganised and is still in the nascent stage. India has the lowest warehouse capacity with
modern facilities compared to the rest of the world, which offers ample opportunities for
investment in this sector.

As the demand for warehouses increases, it is vital to incorporate sustainability in warehouses

and move towards Eco-friendly warehouses that can withstand near-term shocks and
increase efficiency and profitability for companies. As India works towards its sustainability
goals, it would have to adopt a multipronged approach of investing in more efficient cooling
appliances and promoting green buildings, which can help in energy savings. Warehouses will
also have to focus on these factors, especially for a robust cold chain. High-impact sustainable
warehousing solutions can be created by incorporating green infrastructure, industry-leading
technology, and ecosystem-based approaches.

ASSOCHAM, jointly with JLL, has prepared this study to outline factors that would provide
impetus to the warehousing sector. We acknowledge the efforts made by JLL and the
ASSOCHAM team in bringing out the study.

I hope this paper will be helpful to policymakers and business investors who are keen to
invest in the growth story of the country’s warehousing sector.

Deepak Sood
 Sanjay Bajaj
MD, Logistics & Industrial, India and MD, Pune, JLL

Preface
The warehouse real estate market in India is witnessing a steady growth and expansion from
~170 Mn Sq.ft. in 2018 to 287 Mn Sq.ft. in 2021 and this is likely to continue in the upcoming
years. The Grade A share in the stock has also increased from 39% in 2018 to 47% in 2021
showing increased interest from developers and institutional investors for quality spaces with
higher storage handling capacity as well as shift in occupiers’ preference towards compliant
spaces. In addition to the increase in quality warehouse spaces, there have been other notable
trends in the Indian warehousing market:
• Increase in global investors in India’s evolving logistics and industrial sector
• Warehousing demand from 3PL and E-Commerce sectors shifting towards larger storage
space with advancement of technology and automation
• Urban logistics sector emerging as attractive sector in Tier 1 cities as the market is shifting
towards on-demand solutions
• Omni-channel retailing transforming traditional warehousing into fulfillment centers with
higher optimization
The strong institutional interest in logistics, warehousing development and operations in
recent years has transformed the sector from being just a large storage space into a facility
with value addition in terms of inventory management, packaging, product extraction, etc. This
transformation is happening on the back of advancing technology and automation infrastructure,
focus on efficient last-mile deliveries resulting in a growing demand for urban logistics, the rise
of omni-channel retailing, etc.
Furthermore, India’s position in various indices has improved from the previous years due to
various initiatives by the Government such as Make in India, Digital India, infrastructure upgrades
as well as rising skilled professionals under Skill India campaign.
The above dynamics and increased interest from Institutional investors in this sector have
driven the high demand for quality Grade A warehouses. The rising demand, and increasing
construction costs, are expected to increase the rents gradually for Grade A spaces in the near
future. However, rent per pallet position is expected to become more viable and feasible due to
the emergence of efficient warehousing solutions.
This report provides insights into the above-mentioned trends in India’s Logistics Sector,
including global investors investing in the sector, the rise in large Grade A warehousing facilities
and their rents, increasing focus on urban logistics and omni-channel retailing. Moreover, this
report also provides information on topics such as ESG in Warehousing, Cold Storage and Multi-
Storey Warehouses which are at a nascent stage in India.
Enjoy reading!
Sanjay Bajaj
 CONTENTS
Warehouse Market Dynamics in India, 2021................................................................................... 9
Yearly Growth of Warehousing stock ..............................................................................................................9
New Supply Addition..............................................................................................................................................9
Warehouse Net Absorption ..............................................................................................................................10
Current Trends in Indian Warehousing Market............................................................................11
1. Global Investments in Logistics and Industrial Real Estate...........................................................11
Global Investments in India’s evolving Logistics and Industrial Sector.............................11
Growth Drivers...........................................................................................................................................12
Finance Issues in Warehousing...........................................................................................................13
2. Sectoral Shift driving Warehousing Demand towards Larger Storage Space........................14
Demand from 3PL Logistics Players........................................................................................................14
Growing E-Commerce Fulfillment Centers...........................................................................................15
Warehouse Automation increasing the Warehouse Sizes..............................................................16
3. Transforming the Urban Logistics Sector..............................................................................................16
Dark stores: An Infrastructure solution under urban logistics....................................................16
Developers’ Approach towards In-City Warehouses/ Dark Stores............................................18
4. Transformation of Warehousing at the Advent of Omni Channel Retailing...........................18
Future Trends in Indian Warehousing Market..............................................................................20
1. Private-Equity Investors pushing the Warehousing Rents in India...........................................20
Indian Grade A Warehousing Market reaching Global Standards...............................................20
2. ESG (Environment, Social & Governance) in Industrial & Warehousing ................................22
Key Elements of ESG.......................................................................................................................................22
Attributes of Sustainable Warehousing..................................................................................................22
ESG trends in the Indian Real Estate Sector.........................................................................................23
ESG could be an opportunity in brownfield warehouses...............................................................23
ESG Certification...............................................................................................................................................23
3. Cold Chains in India........................................................................................................................................24
Growth Drivers..................................................................................................................................................25
4. Multi-Storey Warehouses as the next step in Logistics...................................................................26
Presence of Multi-Storey Warehousing in Asia Pacific Region.....................................................26
Future of Multi-Storey Warehousing in India......................................................................................27
Conclusion..................................................................................................................................................28
 Warehouse Market Dynamics in India, 2021
Yearly Growth of Warehousing stock
In 2021, India witnessed a 21% y-o-y growth in total stock in Grade A & B warehousing space
Warehouse Market Dynamics in India, 2021:
in top eight cities.1 The overall warehousing space stands at 287 mn sq.ft. at the end-2021
compared Yearly
to 238 Growth of Warehousing
mn sq.ft. in the previous stockyear. Interestingly, Grade A stock in India stood
In 2021, India Warehouse
witnessed a 21% y-o-y
at 134 mn sq.ft.1translating to a 5-year CAGR Market
growth in Dynamics
totalofstock inin
29.9%. India,
Grade A &2021:
Among B warehousing
the eightspace
major in top
cities, more
eight cities . The overall warehousing space stands at 287 mn sq.ft. at the end-2021 compared to 238
than halfmnofsq.ft.
YearlytheGrowth
warehousing stock is stock
of Warehousing
in the previous
contributed
year. Interestingly,
by the three largest cities of the country
Grade A stock in India stood at 134 mn sq.ft. translating
includingto
In Delhi
a 5-year
2021, NCR,
CAGR
India Mumbai,
of 29.9%.
witnessed and
Among
a 21% Bengaluru.
the
y-o-y eight major
growth in totalcities,
stockmore thanAhalf
in Grade & Bofwarehousing
the warehousing
spacestock is
in top
contributed
eight cities1. by
Thethe threewarehousing
overall largest citiesspace
of thestands
country
atincluding DelhiatNCR,
287 mn sq.ft. Mumbai, and
the end-2021 Bengaluru.
compared to 238
mn sq.ft. in the previous year. Interestingly, Grade A stock in India stood at 134 mn sq.ft. translating
to a 5-year CAGR of 29.9%. Among the eight major cities, more than half of the warehousing stock is
contributed by the three largest cities of the country including Delhi NCR, Mumbai, and Bengaluru.

Source: JLL Logistics & Industrial

New Supply Addition

New Supply
Growth Addition
Source: JLLinLogistics
supply&of Grade A spaces over the years is due to high demand for spaces with high
Industrial
specifications and introduction of new players in the market.
Growth inNew Supply
supply Addition
of Grade A spaces over the years is due to high demand for spaces with high
2018
Growth and
specifications in supply
introduction 2019
of Grade A spaces overplayers
of new the years in
is due demand for spaces with high2021
thetomarket.
high2020
specifications and introduction of new players in the market.

2018 60% 2019 60% 2020 60% 2021 60%

31.0 41.4 27.0 40%
49.8
40% 40% 40%
mn. sqft. mn. sqft. mn. sqft. mn. sqft.
60% 60% 60% 60%
31.0 41.4 27.0 40%
49.8
40% 40% 40%
Grademn.
A sqft.Grade B mn. sqft. mn. sqft. mn. sqft.

Source: JLL Logistics & Industrial

Grade A Grade B
Indian Warehouse Stock to reach nearly 500 mn. sqft. by 2025
Source: JLL Logistics & Industrial
Warehouse Net Absorption
Indian Warehouse Stock to reach nearly 500 mn. sqft. by 2025
2

Warehouse
1 Top 8 Cities Net Absorption
include Ahmedabad,
2
Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, NCR Delhi, Pune

1 Indian Warehousing Market: Present and Future

Top 8 Cities include Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, NCR Delhi, Pune
2
Net Absorption is the warehouse space occupied excluding renewals & churning
9
1
 Warehouse Net Absorption2
The warehousing sector has shown robust recovery in 2021 with the industrial demand
reaching pre-COVID times with the net demand recorded at 39.4 mn sq.ft. In addition, more
than 76% of this net demand was observed in Grade A space showing shift in occupiers’
preference towards quality spaces due to adherence to additional hygiene and safety norms
during COVID-19.
2018 2019 2020 2021
24%
56% 56% 56%
31.8 36.4 22.2 39.4
44% mn. sqft. 44% mn. sqft. 44% mn. sqft. mn. sqft. 76%

Grade A Grade B
Source: JLL Logistics & Industrial
2020 2021
Warehouse
Warehouse
24% Gross
Gross Absorption3 in
Absorption 3 2021 is 49.0 mn.sft.
in 2021 is 49.0 mn.sft.
2018 2019 2020 2021
56%
12%
6%
22.2Overall Overall
India India in 2021
39.4Vacancy
Vacancy Levelfor
Level for Grade
Grade A &AB&at B at 12% in 2021
and is expected
and isto expected
24% witness to
44% mn. sqft. mn.56%
sqft. 76% huge dip to fall below
56% 9%
witness huge dip to fall below 9% by 2025by 2025 56%
31.8 36.4 22.2 39.4
3PL/Logistics
44%
has remained
mn. sqft. 44% the largest
2017 –segment
mn. sqft. 44%
based on warehousing
mn. sqft.
2019 (Pre-Pandemic) space
mn. sqft. demand
2020 – 2021 (During
76%
Pandemic)
over the last 5 years. Space demand due to E-Commerce has gained traction as e-commerce
penetration
Gradehas
A increased
Grade B over the years. Many e-commerce categories such as retail, grocery,
Shift
ion3 in 2021 ispharmacy,
49.0 mn.sft.and infood
Source: delivery
JLL Logistics are expected to grow even further, as people make a behavioral
& Industrial
shift from
A & B at 12% in Sectoral
making to offline purchases to online ones. COVID-19 has accelerated eCommerce
2021 Share
and is expected Warehouse Gross Absorption3 in 2021 is 49.0 mn.sft.
witness
adoption, leading to an increase in demand for online delivery of essential and non-essential
below 9% by 2025
items. Demand
(2017 – Overall
2021)fromIndia other consumption-based
Vacancy 12% in such
Level for Grade A & B atsectors 2021 and
as isRetail
expectedand FMCG have
to witness
also increased while the share of huge dip to fall below 9%
manufacturing demand
by 2025from Auto & Ancillaries and
19 (Pre-Pandemic) 2020 – 2021 (During Pandemic)
Engineering sectors have decreased during the pandemic.
2017 – 2019 (Pre-Pandemic) 2020 – 2021 (During Pandemic)
Source: JLL Logistics & Industrial

Shift in
Sectoral Share
(2017 – 2021)
Source: JLL Logistics & Industrial

Source: JLL Logistics & Industrial

2 Net Absorption is the warehouse space occupied excluding renewals & churning
3
Gross Absorption is all transactions that happened in the market including renewals & churning
3 Gross Absorption is all transactions that happened in the market including renewals & churning

Indian Warehousing Market: Present and Future

10
 Current Trends in Indian Warehousing Market
1. Global Investments in Logistics and Industrial Real Estate
1. Global Investments in Logistics and Industrial Real Estate
Interestingly, investment in the logistics and industrial sector for the Asia-Pacific Region
Interestingly,
1. USD
Global investment in
inthe logistics andIndustrial
industrial sectorEstate
for the Asia-Pacific Region was USD 48
was 48Investments
Billion in 2021 Logistics
which andwas almost a Real 50% upsurge from the previous year. This
Billion in 2021 which was almost a 50% upsurge from the previous year. This investment represented
investment represented
Interestingly, investment innearly 27% and
the logistics of total real sector
industrial estatefor
investment in the
the Asia-Pacific region,
Region was aUSD
superior
48
nearly 27% of total real estate investment in the region, a superior performance when compared
performance
Billion in 2021when
globally.
whichcompared
was almost globally.
a 50% upsurge from the previous year. This investment represented
nearly 27% of total real estate investment in the region, a superior performance when compared
globally.
Real Estate Investment in
Logistics Investment in Asia - Pacific Region
Asia-Pacific Region, 2021
Real Estate Investment in (USD Bn)
Others Logistics Investment in Asia - Pacific Region
Asia-Pacific
Hospitality 6%Region, 2021
5% Others Retail
(USD Bn) 48

Hospitality 6% 20% 32
24.8 48
Logistics 5% USD Retail
27% 32
177 Bn20% 24.8
Logistics USD
27% Office
177 Bn42% 2019 2020 2021
Office
42% 2019 2020 2021
Source: JLL

In markets with a stronger economic recovery, sectors such as logistics and industrial have scaled up
InSource:
marketsJLL
with a stronger economic recovery, sectors such as logistics and industrial have
the wish-lists of investors looking to diversify their portfolios.
scaled up the
In markets wish-lists
with a strongerofeconomic
investors lookingsectors
recovery, to diversify
such as their portfolios.
logistics and industrial have scaled up
the wish-lists of investors looking to diversify their portfolios.
Global Investments
Global Investments in India’s evolving
in India’s Logistics Logistics
evolving and Industrial Sector
and Industrial Sector
The warehousing
Global andinlogistics
Investments sector has
India’s evolving been the
Logistics largest
and beneficiary
Industrial Sector during the COVID-19 pandemic
The warehousing and logistics sector has been the largest beneficiary during the COVID-19
and the share of the sector has increased from 2% in 2020 to 20% in 2021 (Source: JLL India Research).
The warehousing
pandemic and theand logistics
share sector
of the has has
sector beenincreased
the largestfrom
beneficiary
2% induring
2020the COVID-19
to 20% (Source:
pandemic
in 2021
Real
and Estate
the Investment
share of the
JLL India Research). in
sector India,
has 2020
increased from 2% in 2020Real
to Estate
20% in Investment
2021 in
(Source: India,
JLL India2021
Research).

Real Estate Investment in India, 2020 Real Estate Investment in India, 2021
Residential
Logistics Retail
9%
20% 13% Others
Residential
Logistics Logistics Retail 11%
9% 2% 20% 13%
USD
USD USD Others
Logistics 11%
Office 5.0 Bn Hospitality
2% 4.3 Bn
USD 3% Resident USD Office
86%
5.0 Bn ial 4.3 Bn 31%
Office Hospitality 25%
3% Resident Office
86%
ial 31%
25%

Source: JLL

This sector
Source: JLL emerged attractive during the pandemic due to the increasing shift to online shopping
from discretionary to essentials. Major global funds have invested with warehousing developers and
Indian
This sector emerged attractive Warehousing
during Market:
the pandemic duePresent
to the and Future shift to online shopping
increasing
operators to expand their reach and regional footprint, being the key differentiators in the sector.
from discretionary to essentials. Major global funds have invested with warehousing developers and
11 being the key differentiators in the sector.
operators to expand their reach and regional footprint,
This sector emerged attractive during the pandemic due to the increasing shift to online
shopping from discretionary to essentials. Major global funds have invested with warehousing
developers and operators to expand their reach and regional footprint, being the key
differentiators in the sector.

Highlights
Highlights ofof
recent committed
recent institutional
committed investments
institutional in IndianinLogistics
investments Indian and Industrial
Logistics and
Market, 2021:
Industrial Market, 2021:

Source: JLL and various other market sources

Although
Although Tier
Tier 1 1 cities
cities arekey
are the the key
focus focus investment
investment hubs the
hubs for investors, forincreasing
investors, the increasing
expansion needs
expansion
steered byneeds steered
e-commerce andby3PLe-commerce
players have led andto 3PL players have
the development led toA warehouses
of Grade the development
in Tier of
2 andA3 warehouses
Grade cities, attracting
ininvestments
Tier 2 andin3 these
cities,cities. This is due
attracting to the increased
investments internet
in these penetration,
cities. This is due
to government’s
the increased push for Digital
internet India, rising government’s
penetration, levels of disposable pushincome, young India,
for Digital population which
rising is of
levels
cognizant of brands and a higher standard of living.
disposable income, young population which is cognizant of brands and a higher standard of
living.
Tier 2 and 3 cities including Rajpura, Anantapur, Sri City, Coimbatore, Nagpur, Lucknow, Siliguri,
Jaipur, Bhubaneswar, Guwahati, Hosur, etc. are attracting investments from institutional investors
Tier
and2 developers
and 3 cities including
such Rajpura,
as IndoSpace, Anantapur,
ESR, LOGOS, Sri Blackstone,
Welspun, City, Coimbatore, Nagpur,
etc. as they Lucknow,
expand their
Siliguri, Jaipur, Bhubaneswar, Guwahati, Hosur,
footprints across the country. (Source: JLL India Research) etc. are attracting investments from
institutional investors and developers such as IndoSpace, ESR, LOGOS, Welspun,
Growth Drivers
Blackstone, etc. as they expand their footprints across the country. (Source: JLL India
Research)
 The most active sectors during the pandemic have been e-commerce, FMCG (including grocery),
pharmaceutical and 3PL players, and they will continue to expand over the long term. These
Growthsectors demand for special supply chain models including cold chain and last-mile logistics, which
Drivers
requires significant upgrades and wider investor participation.
Rising
●●  The disposable
most incomesduring
active sectors across India and increasing
the pandemic demand
have been from thee-commerce
e-commerce, FMCG sector have
(including
prompted developers to increase the storage space across the country.
grocery), pharmaceutical and 3PL players, and they will continue to expand over
Shifts
 the longin the supply
term. chainsectors
These due to the increasing
demand for prevalence of direct-to-consumer
special supply chain modelsconsumption,
including cold
has generated an entirely new demand-base for industrial space. This has pushed the investors to
chain and last-mile logistics, which requires significant upgrades and wider investor
look for innovative solutions and digital transformation.
participation.
 Pandemic has accelerated trends such as increased internet penetration rates, expansion of
online disposable
●● Rising grocery, omni-channel
incomes retail,
acrossand integration
theand
India of technology
increasing demand frominto thee-commerce
logistics and
warehousing.
sector have prompted developers to increase the storage space across the country.
Platform deals in the logistics and warehousing sector are likely to remain active as the segment has
been benefitting from the growing e-commerce and 3PL demand as well as pandemic-induced
demand for cold storage facilities from pharmaceutical
Indian Warehousing Market:and FMCGand
Present sectors.
Future
Finance Issues in Warehousing
12
Although the demand and supply sides remain robust, the last two years of the pandemic and global
●● Shifts in the supply chain due to the increasing prevalence of direct-to-consumer
consumption, has generated an entirely new demand-base for industrial space. This has
pushed the investors to look for innovative solutions and digital transformation.

●● Pandemic has accelerated trends such as increased internet penetration rates,

expansion of online grocery, omni-channel retail, and the integration of technology
into logistics and warehousing.

Platform deals in the logistics and warehousing sector are likely to remain active as the
segment has been benefitting from the growing e-commerce and 3PL demand as well as
pandemic-induced demand for cold storage facilities from pharmaceutical and FMCG sectors.

Finance Issues in Warehousing

Although the demand and supply sides remain robust, the last two years of the pandemic
and global supply-chain disruptions have resulted in significant escalation in construction
costs for the warehousing industry. In comparison, rent corrections have been slow, putting
pressure on developers’ profitability.

Warehousing developers typically eye an entry yield of 9%-10% and IRR (internal rate
of return) of 18%-20%. Given the current circumstances, builders have an entry yield of
around 7%-7.5% depending on the location, land rates, etc. and IRR would not be more
than 14%.

Some of the Key Factors impacting the yield are:

Land cost: Cost of land, a key input in warehousing, has increased across key markets since
there is a lot of capital chasing the preferred land parcels.

Construction cost: The average cost of constructing grade A warehouses has gone up from
INR 1,600 per square foot in pre-Covid-19 times to INR 1,800 - INR 2,000 now. This is because
of steep cost escalation in major commodities such as cement and steel, which has gone up by
30%-35% and 45%-47% respectively.
(Source: JLL Whitepaper on “Construction Cost Guide Book India – 2022”: https://www.jll.co.in/en/trends-and-
insights/research/construction-cost-guide-book-india-2022)

Warehousing Rents: Amid the rising costs, the current rentals for Grade A facilities across
key markets are becoming less sustainable. Rents in key warehousing markets have grown
by less than 3% CAGR from 2018 to 2021. Considering the increasing construction costs and
land rates, most developers expect a correction in rents by 2023 and the new supply coming
up is expected to attract higher rentals.

Indian Warehousing Market: Present and Future

13
2. Sectoral Shift driving Warehousing Demand towards Larger Storage Space
Over the years, the warehousing industry in India has evolved from storage space to
highly sophisticated warehousing and logistics systems. The warehousing sector in
India was highly
2. Sectoral Shift fragmented with smaller
driving Warehousing Demand boxes having
towards limited
Larger scope
Storage Spaceof automation or
mechanization. Now, warehouses have become one of the most crucial elements of the
Over the years, the warehousing industry in India has evolved from storage space to highly
Indian Logistics Industry. The evolution of organized e-commerce, 3PL, retail and other
sophisticated warehousing and logistics systems. The warehousing sector in India was highly
sectors as well as increased traction from global investors/ developers have pushed the
fragmented with smaller boxes having limited scope of automation or mechanization. Now,
growth of organized
warehouses have becomewarehouses.
one of the This
most market is now of
crucial elements at the
a pivotal point inIndustry.
Indian Logistics the evolution
The
from manual warehouses to organized automated/ mechanized warehouses. The spread
evolution of organized e-commerce, 3PL, retail and other sectors as well as increased traction from
ofglobal
e-commerce, retail andhave
investors/ developers 3PLpushed
sectors
the in Tierof2organized
growth and 3 cities have also
warehouses. transformed
This market is now atthe
warehousing market
a pivotal point in the in these cities.
evolution from manual warehouses to organized automated/ mechanized
warehouses. The spread of e-commerce, retail and 3PL sectors in Tier 2 and 3 cities have also
This transformation
transformed towardsmarket
the warehousing sophisticated state-of-the-art warehousing has resulted in the
in these cities.
increase in average size of Grade A warehouse by 2x in India. Interestingly, the warehouse
This transformation towards sophisticated state-of-the-art warehousing has resulted in the increase
size has not just increased in terms of area, the average height4 has also increased from
in average size of Grade A warehouse by 2x in India. Interestingly, the warehouse size has not just
9 m in 2016 to 12 m in 2021 as per JLL assumption which has increased the average
increased in terms of area, the average height4 has also increased from 9 m in 2016 to 12 m in 2021
volume ofassumption
as per JLL Grade A warehouse by 3x. the average volume of Grade A warehouse by 3x.
which has increased

Average Grade A Warehouse Size Average Grade A Warehouse Volume

Source: JLL Logistics & Industrial

The demand from 3PL/ Logistics and E-Commerce players have increased from less than 30% in 2016
The demand
to more thanfrom 3PL/
50% in Logistics
2021. and E-Commerce
These sectors have specializedplayers have increased
requirements from less than
in terms of warehouse 30%
layout,
operations, and customer experience.
in 2016 to more than 50% in 2021. These sectors have specialized requirements in terms of
warehouse layout, operations, and customer experience.
Demand from 3PL Logistics Players
Demand from
The size of 3PL warehouses
individual Logistics Players
is growing, and they are now becoming cargo hubs to store goods
for multiple clients.
The size of individual warehouses is growing, and they are now becoming cargo hubs to store
The warehousing
goods for multipleand distribution strategy has changed with the introduction of Goods and Services
clients.
Tax (GST) in 2017, and warehouses are built on supply chain efficiency since then rather than
considering
The the benefits
warehousing from tax saving.
and distribution Subsequently,
strategy the trend
has changed moved
with towards consolidation
the introduction of Goods
from multiple smaller warehouses to larger fulfillment centers.
and Services Tax (GST) in 2017, and warehouses are built on supply chain efficiency
since then rather
 Logistics than have
companies considering the
seized this benefits from
opportunity tax saving.
and switched fromSubsequently,
management ofthe trend
single
company warehouses to a multi-client and multi-product model.
4 Disclaimer: The height of a typical Grade A warehouse varies from 10 to 12 m in the market with some outlying height of 9
The
m and 13small
m. Thee-commerce
average heightplayers
of 12 m take advantage
is prevalent in the of these multi-client, multi-product facilities as they
market.
need flexibility in terms of seasonal space requirement.
 Through consolidation of operations in large warehouses, the companies can also benefit with
cutting down on cost. Indian Warehousing Market: Present and Future

14
moved towards consolidation from multiple smaller warehouses to larger fulfillment
centers.

●● Logistics companies have seized this opportunity and switched from management of
single company warehouses to a multi-client and multi-product model.

●● The small e-commerce players take advantage of these multi-client, multi-product

facilities as they need flexibility in terms of seasonal space requirement.

●● Through consolidation of operations in large warehouses, the companies can also benefit
with cutting down on cost.

Large 3PL/ Logistics transactions with areas more than 4 lakhs sq.ft. have been observed
in the last two years from major 3PL companies in large consumer-based cities such as
NCR, Mumbai, Bengaluru, Hyderabad, etc. (Source: JLL India Research)

Growing E-Commerce Fulfillment Centers

The growth in e-commerce has turned warehouse and distribution centers into mega
fulfillment centers.

A fulfillment center is the hub for all the logistics processes required to bring a supplier’s
product to his customer and is designed to enhance the customer experience around the
process of ordering and having products delivered on time.

India witnessed instances of global e-commerce transactions with box sizes of more than
2 lakhs sq.ft. going up to 1 million sq.ft. in tier 1 cities. Interestingly, volume of these
warehouses is ranging from 8 million cu.ft. to 40 million cu.ft. in these cities which shows
significant increase in efficiency in storage and handling capacity. (Source: JLL India Research)

Efficient Warehousing Operations demand for Large Space with adequate Interior Space for:
●● flow of work
●● handling equipment for the goods,
●● ancillary activities such as repacking, labelling, kitting, break bulk, etc.
●● special storage, if required (cold storage, hazardous goods, etc.)
●● keeping large goods and heavy machinery in proper order without clutter
●● Good amount of space surrounding the warehouse for parking to facilitate the efficient
loading and unloading of goods.

India witnessed more than 15 transactions of warehouses with box size more than half
a million square feet going up to 1 million square feet in the recent years. The demand

Indian Warehousing Market: Present and Future

15
for larger warehouses is majorly driven by sectors such as 3PL/ Logistics, e-commerce,
retail and other manufacturing sectors such as Engineering and Electronics. (Source: JLL
India Research)

Warehouse Automation increasing the Warehouse Sizes

Warehouses have started automating their processes. These automated warehouses
extensively use conveyors, sortation equipment, automated storage & retrieval system (AS/
RS), and other material handling. Some of the automating equipment which increases the
efficiency of a warehouse in the long run are:

A type of warehouse automation

Automated system
technology specifically designed to
of separating
buffer, store and retrieve product
Mechanical devices or products from in-
and inventory on demand. It includes
assemblies to safely feed conveyor lines
shuttles, cranes, vertical lift modules
and efficiently transport to shipping lines,
(VLMs), micro-loads, mini-loads, unit-
material through palletizing
loads, or other mechanical systems
distribution process operations, packing
integrated with a warehouse
with minimal effort stations and other
execution software (WES) or
sortation
warehouse management system
applications
(WMS)

Larger warehouses provide space and opportunity to improve operations via automation,
which results in quicker turn-around time.

3. Transforming the Urban Logistics Sector

Urban Logistics Sector is highly attractive in tier 1 cities primarily in grocery & agricultural
products, pharmacy, fashion & retail (clothes and garments) and FMCD. The market is shifting
more towards on-demand solutions which has further increased the demand for faster
delivery. Hence, the last mile distribution of goods and urban logistics spaces attain
critical importance by developing warehouses close to cities.

Dark stores: An Infrastructure solution under urban logistics

Dark stores are the ‘go-to’ solution which can adapt to the complex supply chain involved in
the workings of various formats that offer service options to the end customer. Consumers
can make digital purchases through dark store online shopping platforms with the goods,
either home delivered (same-day delivery) or collected by the consumer from the dark store.

Indian Warehousing Market: Present and Future

16
The concept is rapidly gaining interest in India because of the post pandemic effect, where
some of the retail outlets have also converted partially or fully to dark stores to leverage their
assets.

Why are Occupiers moving towards Dark Stores?

●● Higher space optimization and stock management can be achieved with lower delivery
times and reduced shipping costs

●● FMCG/ FMCD sector have higher requirement of Stock-Keeping Units (SKUs). Dark stores
focus primarily on click-and-collect functionality, thereby optimizing SKU management

●● Dark stores are efficient as they do not require dedicated space or cost for the shopping
experience

●● They cater to multiple online retailers simultaneously, facilitating retailers to save real
estate expenditures

Global E-Commerce companies and e-grocery companies such as Blinkit (more than 25
in-city warehouse transactions), Big Basket are occupying in-city warehouses in major
Tier 1 cities including NCR Delhi, Pune, Bengaluru, Kolkata etc. which are also the major
distribution hubs in their respective regions.
(Source: JLL India Research)

Role of Dark Stores in the Supply Chain

Case of Dunzo Case of Swiggy

Before Dunzo used to deliver from on-
board local grocery stores in each
neighborhood to its customers through
delivery agent.
After “Dunzo Daily” replacing local grocery
stores and deploying over 250 dark
stores to service more than 700
neighborhoods. Dark stores, stocked
up with top 1,500 – 2,000 SKUs, have
brought down the delivery time to just
20 minutes.
Source: JLL India Research and various other market sources
Swiggy’s marketplace-based grocery
delivery experienced below-par
customer experience as this model
relies on partners such as local grocery
stores to continuously update their
inventory database.
This model got replaced with “Instamart”
to provide instant delivery service for
groceries and other household items,
fulfilled through a network of dark
stores.

Indian Warehousing Market: Present and Future

17
Developers’ Approach towards In-City Warehouses/ Dark Stores
Although urban logistics is gaining popularity in the Indian market, it has a relatively higher
cost component for the E-Commerce player to develop multiple in-city warehousing or dark
stores in the city neighborhoods. Moreover, the size of these spaces range from 5,000 to
25,000 sq. ft. for which availability of land is difficult in the city area.

●● Developers are now reinventing and repositioning usage of their existing assets in the
city.

●● Developers are more aware of the real estate market than the e-commerce players in tier
1 as well as the under explored tier 2 cities. They facilitate the players to carve out
spaces in the city.

●● E-Commerce players also could explore the defunct, stressed assets as well as alternate
use of the existing assets of the developers. These types of assets also help in reducing
the rents and hence, overall cost of the in-city warehouses.

●● To reduce the cost component of dark stores and address the seasonality of the
demand, new models such as temporary lease of 6 months are being adopted.

●● The delivery time is reducing from 1-day delivery to 1 hour to 30 minutes. This reduction
in delivery time from days to hours to minutes demand for multiple warehouses near to
the consumption hubs (in-city).

4. Transformation of Warehousing at the Advent of Omni Channel Retailing

Rise of Omni Channel Retailing in India

●● India is the world’s fifth-largest retail market accounting for over 10% of its GDP.

●● The Indian retail industry market size: USD 950 Bn in 2019 forecasted to USD 1,750
Bn by 2026.

●● The retail sector growth is expected not just in the traditional brick & mortar stores, but
also in e-commerce. E-Commerce market is projected to grow from USD 45 Billion in
2019 to USD 99 Billion in 2024.

Omni-channel retailing is expected to help in optimizing inventory holding costs, operating

costs and real estate costs, while increasing brand prominence and consumer base across the
country.

Indian Warehousing Market: Present and Future

18
 4.
 Transformation
India is the world’soffifth-largest
Warehousing atmarket
retail the Advent of Omni
accounting Channel
for over Retailing
10% of its GDP
 The Indian retail industry market size: USD 950 Bn in 2019 forecasted to USD 1,750 Bn by 2026
Rise of Omni Channel Retailing in India
 The retail sector growth is expected not just in the traditional brick & mortar stores, but also in e-
 India is the world’s
commerce. fifth-largest
E-Commerce market retail markettoaccounting
is projected USDover
grow from for 10% ofinits
45 Billion GDPto USD 99 Billion
2019
in 2024.
 The Indian retail industry market size: USD 950 Bn in 2019 forecasted to USD 1,750 Bn by 2026
 The retail sector growth is expected not just in the traditional brick & mortar stores, but also in e-
Omni-channel retailing is expected to help in optimizing inventory holding costs, operating costs and
commerce. E-Commerce market is projected to grow from USD 45 Billion in 2019 to USD 99 Billion
real estate costs, while increasing brand prominence and consumer base across the country.
in 2024.
Indian Omni-Channel Market (USD Million) Government’s
Omni-channel retailing is expected to help in optimizing inventory Push for costs,
holding the Omni-Channel
operating costs and
Market:
real estate costs, while increasing brand prominence and consumer base across the country.
1. Easing of FDI policies in India with 51% FDI in
Indian Omni-Channel Market (USD Million) Government’s
multi-brandPush
retailfor
andthe
100%Omni-Channel
FDI in single-brand
Market:
retail under the automatic route.
1. Cumulative
Easing of FDIFDI inflowininIndia
policies retail stood
with 51%atFDI
USD in
2.17 Billion between 2000 & 2020 (Source: IBEF)
multi-brand retail and 100% FDI in single-brand
retail under the automatic route.
2. Launch of initiatives
Cumulative FDI inflowsuch as ‘Make
in retail in India’
stood at USD
Source: https://www.marketsandmarkets.com/Market-
Reports/india-omni-channel-warehouse-management-systems- and ‘Goods & Services Tax (GST) Reform.
2.17 Billion between 2000 & 2020 (Source: IBEF)
market-3747439.html

Transformation of warehousing due to omni-channel retailing

2. Launch of initiatives such as ‘Make in India’
Source: https://www.marketsandmarkets.com/Market-
Reports/india-omni-channel-warehouse-management-systems- and ‘Goods & Services Tax (GST) Reform.
market-3747439.html Omni-Channel Retailing
Traditional Warehousing
Transformation of warehousing due to omni-channelEach
retailing
System order maybe unique with multiple small
shipments involved.
Orders are picked in batches
based on assumed processing Continuous evaluation of the order
Omni-Channel pool and automatic
Retailing
Traditional Warehousing
capacity releases based on variables such as order priorities and
System Each order maybe
facility unique with
processing multiple small
capacities
shipments involved.
Orders are picked in batches
based on assumed processing Continuous evaluation of the order pool and automatic
capacitynew alternatives: buying onlinereleases
Customers expect basedin-store
and pickup on variables suchfrom
or ship as order priorities and
store
Customers expect new alternatives: buying online and facility pickup in-storecapacities
processing or ship from store
Effectually, this transforms a traditional retail store into a fulfilment center. This demands for
Effectually,
optimization this transforms
of store inventoryaand
traditional retail store
flexible fulfilment into
options thata meet
fulfilment center.
profitability Thistoo.
targets demands
Customers expect new alternatives: buying online and pickup in-store or ship from store
for optimization of store inventory and flexible fulfilment options that meet profitability
Logistics in Omni-Channel Retailing
Effectually,
targets too. this transforms a traditional retail store into a fulfilment center. This demands for
optimization of store inventory and flexible fulfilment options that meet profitability targets too.

Logistics in Omni-Channel Retailing

Inventory Utilization: Create a single program: Local Returns: In-store returns for
First in-first out from catering to all customer products purchased online presents an
stores to utilize older needs & providing a unified opportunity to boost in-store sales
inventory omnipresent experience resulting in returns becoming a part
Inventory Utilization: Create a single program: Local Returns: In-store returns for of
First in-first out from catering to all customer sales strategy
products purchased online presents an
stores to utilize older needs
Some of the major omni-channel retail & providing
playersaincluding
unified Decathlon, Pepperfry,
opportunity IKEA, Reliance,
to boost in-store sales etc.
inventory
are occupying omnipresent experience
warehouses of size varying from 2 lakhs sq.ft. resulting in returns
to 1 million sq.ft. becoming a part
in different Tierof1 cities
(NCR Delhi, Bengaluru, Pune, Chennai, Kolkata, etc.) in the last two years. sales(Source:
strategyJLL India Research)
Someof
Some of the
the major
major omni-channel
omni-channelretail retail
players players
including including
Decathlon, Pepperfry,
Decathlon, IKEA, Reliance, etc.
Pepperfry, IKEA,
are occupying warehouses of size varying from 2 lakhs sq.ft. to 1 million sq.ft. in
Reliance, etc. are occupying warehouses of size varying from 2 lakhs sq.ft. to 1 milliondifferent Tier 1 cities
(NCR Delhi, Bengaluru, Pune, Chennai, Kolkata, etc.) in the last two years. (Source: JLL India Research)
sq.ft. in different Tier 1 cities (NCR Delhi, Bengaluru, Pune, Chennai, Kolkata, etc.) in the
last two years. (Source: JLL India Research)

Indian Warehousing Market: Present and Future

19
 Future Trends in Indian Warehousing Market
1. Private-Equity Investors pushing the Warehousing Rents in India
Private equity-backed warehousing companies are capturing a substantial part of the overall
1. Private-Equity Investors pushing the Warehousing Rents in India
growth in the warehousing sector with investors such as ESR, Blackstone, IndoSpace, LOGOS,
MapleTree, Ascendas,warehousing
Private equity-backed Morgan Stanley, Xander,
companies areWelspun,
capturing etc. contributing
a substantial tothe
part of major warehousing
overall growth
in the warehousing sector with investors such as ESR, Blackstone, IndoSpace, LOGOS,
transactions. While the Grade A stock grew at a CAGR of 23%, institutional funded projects MapleTree,
Ascendas, Morgan Stanley, Xander, Welspun, etc. contributing to major warehousing transactions.
grew at a CAGR of 28% showing a higher number of projects from institutional funds adding
While the Grade A stock grew at a CAGR of 23%, institutional funded projects grew at a CAGR of 28%
toshowing
the supply y-o-y.
a higher number of projects from institutional funds adding to the supply y-o-y.

Source: JLL Logistics & Industrial

Indian Grade A Warehousing Market reaching Global Standards

Indian Grade A Warehousing Market reaching Global Standards
Grade
GradeAAwarehouses
warehouses in in India
Indiaare
arebecoming
becoming at at
parpar
withwith global
global standards
standards in terms
in terms of quality
of quality and
and specifications,
specifications, whichwhich encourages
encourages more investors
more investors to invest andto attract
invest occupiers
and attract
who occupiers
require suchwho
facilities.such
require These private equity-backed
facilities. These privatewarehousing companies
equity-backed are bringing global
warehousing standards
companies aretobringing
India
and have developed state-of-the-art facilities in metro cities such as Mumbai,
global standards to India and have developed state-of-the-art facilities in metro cities suchNCR Delhi, Chennai,
Pune, Bengaluru, etc. Moreover, the same is being explored by the Indian developers and investors as
as Mumbai, NCR Delhi, Chennai, Pune, Bengaluru, etc. Moreover, the same is being explored
well. These projects have warehouse box size of more than 1 Million Sq.ft., height of 12 m, FM2
bycompliant
the Indian developers
flooring with loadingandofinvestors
5 MT/ sq.m.,asinternal
well. These
docking projects
and otherhave warehouse
features includingbox size of
skylight,
more than 1 Million
fire hydrants, Sq.ft.,etc.
dock doors, height of 12 m, FM2 compliant flooring with loading of 5 MT/ sq.m.,
internal docking and other features including skylight, fire hydrants, dock doors, etc.

For
Forhigh
high quality Grade
quality Grade A warehouses,
A warehouses, therethere
is littleisscope
littleofscope of costs,
reducing reducing costs,
resulting resulting
in upward
pressure on rents. With the increasing interests from the PE investors in the Indian
in upward pressure on rents. With the increasing interests from the PE investors in the Warehousing
Market, the warehousing rents are expected to witness revisions and grow at ~5% annually in the
Indian Warehousing Market, the warehousing rents are expected to witness revisions
next 4 years.
and grow at ~5% annually in the next 4 years.
Grade A & B Warehouse Rents in INR per sq.ft. per month (2021 – 2025)

Indian Warehousing Market: Present and Future

20
 fire hydrants, dock doors, etc.

For high quality Grade A warehouses, there is little scope of reducing costs, resulting in upward
pressure on rents. With the increasing interests from the PE investors in the Indian Warehousing
Market, the warehousing rents are expected to witness revisions and grow at ~5% annually in the
next 4 years.

Grade A & B Warehouse Rents in INR per sq.ft. per month (2021 – 2025)

Source: JLL Logistics & Industrial

The overall rent for Grade A warehouses is higher than Grade B and C due to higher
construction costs. But, considering the volume, current rents in India (INR/ sq.ft./ month),
storage capacity, cargo handling capacity and pallet capacity, the rent for a Grade A warehouse
is more cost-efficient than the other Grades (as shown in the table below).

The estimation of rental for each pallet position is derived based on a typical warehouse
of 100,000 sq.ft.

Parameters Grade A Grade B Grade C

Volume (cu.ft.) 2,800,000 2,475,000 1,440,000
Pallet Capacity (No.) 26,923 17,308 12,308
Rental for Cu.ft. Warehousing Space 0.75 0.73 1.04
(INR/ cu.ft./ month)
Rental for Each Pallet Position 78 104 122
(INR/ pallet/ month)
Source: JLL Logistics & Industrial

Assumptions:
a. Rental Space c. CAM Charges included in f. Handling Time per pallet:
• Grade A: 70% the rents • Grade A: 5 min
• Grade B: 75% • Grade B: 8 min
• Grade C: 80% • Grade C: 10 min
b. Rents (INR/ sq.ft./ month): e. Floor Load (kg per sq.ft.):
• Grade A: 21 • Grade A: 500
• Grade B: 18 • Grade B: 400
• Grade C: 15 • Grade C: 250

Incremental Reduction in Rental for each pallet:

• From Grade B to Grade A: 25%
• From Grade C to Grade A: 36%

Indian Warehousing Market: Present and Future

21
This is a major factor for the increase in traction from the institutional investors and
developers in developing good quality Grade A warehouses in India.

2. ESG (Environment, Social & Governance) in Industrial & Warehousing

Globally,
2. ESGthe(Environment,
industrial sector
Social &accounts for in
Governance) 23% of the&global
Industrial carbon emissions (Source: United
Warehousing
2. ESG (Environment, Social & Governance) in Industrial & Warehousing
States Environmental Protection Agency) and freight transport currently accounts for around
Globally, the industrial sector accounts for 23% of the global carbon emissions (Source: United States
30%Globally,
of all transport
Environmental related
the industrial sector
Protection CO2and
Agency) emissions
accounts for 23% of
freight (Source:
the global
transport ITF).emissions
carbon
currently Therefore,
accounts theUnited
(Source:
for carbon
around of footprint
30% Statesall
Environmental
associated
transportwith Protection
transporting
related Agency)
CO2 emissions and freight
and(Source:
storingITF). transport
goods currently
is under
Therefore, carbon footprint associated ofwith
accounts
theassessment. for around 30% all
transport
transportingrelated CO2 emissions
and storing (Source:
goods is under ITF). Therefore, the carbon footprint associated with
assessment.
transporting and storing goods is under assessment.
ESG has therefore become a priority for industrial and logistics real estate developers, who
ESG has therefore become a priority for industrial and logistics real estate developers, who are
are increasingly
ESG
increasingly
focusing
has therefore
focusingbecome
onaenvironmental
priority for
on environmental
and social
andindustrial
issues
andalong
social issues logistics along
with real
with
estate
business
businesswho
developers,
profitability.
profitability.
are
increasingly focusing on environmental and social issues along with business profitability.
The The
opportunity
opportunity now exists
now exists for for land-owners
land-owners and developers
and developers to review thetosustainability
review the sustainability
parameters
The
of opportunity
their assets. now exists for land-owners and developers to review the sustainability parameters
parameters of their assets.
of their assets.

Key Key
Elements ofESG
Elements of ESG
Key Elements of ESG

Attributes of Sustainable Warehousing

Attributes
Attributesof
of Sustainable Warehousing
Sustainable Warehousing

Location: Interior: Sustainable Exterior: Cool Infrastructure & Labour Friendly:

Location:
Distribution Interior: Sustainable
centres construction materials: Exterior:(light-
roofing Cool Infrastructure
Park Operations:& Labour Friendly:
Location, work
Distribution centres
close to cities & construction
specialized materials:
paints, roofing
coloured Park Operations:
(light- Environment friendly Location, work
environment &
close to cities
transportation & specialized
adhesives, paints,
wood coloured
reflective Environment friendly
landscaping environment
pollution-free&
transportation
hubs to minimize adhesives,
products, wood
sealants, etc. reflective&
materials) landscaping
practices, waste- pollution-free
workplace are the
hubs to minimize
transportation products,
Use of LED lightingetc.
sealants, & materials)
solar power & practices,
water waste-
treatment workplace
major are the
success
transportation
costs & carbon Use of LEDfans
HVLS lighting
for & solar power
panels water
plants &treatment
rainwater major
factors forsuccess
a labour -
costs & carbon
emissions HVLS fans
regulating for
temperature panels plants & rainwater
harvesting factors for a labour -
friendly environment
emissions regulating temperature harvesting friendly environment
ESG trends in the Indian Real Estate Sector
ESG trends in the Indian Real Estate Sector
 Developers are moving towards developing net zero assets
Indian Warehousing Market:assets
Present and Future
 Developers
Tenants areare moving
seeing valuetowards that net
developing
in properties are zero
energy efficient and sustainable, given their
 Tenants are seeing
commitment value
towards the in
netproperties that are energy efficient and sustainable, given their
zero ambition.
commitment towards the net zero ambition. 22
ESG trends in the Indian Real Estate Sector
●● Developers are moving towards developing net zero assets.

●● Tenants are seeing value in properties that are energy efficient and sustainable,
given their commitment towards the net zero ambition.

●● Shift in investor preference towards developers who are placing emphasis on ESG
parameters, sustainability policy framework and initiatives

●● State-level incentives are provided in India to encourage green buildings (including

warehouses). For example, Government of Tamil Nadu offers a subsidy of 25% on the cost
of setting up environmental protection infrastructure for industrial projects that obtain
IGBC (Indian Green Building Council) Green Certification.

●● ESG intervention is shifting from a CSR initiative to a key constituent in decision

making.

●● Some of the large developers in India have been working on having an ESG policy
framework in line with the global standards.

●● As a result, projects achieving ESG standards should experience easier planning process,
tenant retention and investor confidence. It is therefore advantageous to consider ESG
parameters at the time of master planning, designing and construction phases, to avoid
higher costs for future refurbishing.

ESG could be an opportunity in brownfield warehouses

The potential for ESG improvements should not be ignored in the existing industrial and
warehousing structures either. Although new structures offer the possibility of designing ESG
initiatives during the master planning process, majority of the existing industrial and logistics
structures were implemented when there was little awareness about ESG. In such situations,
the aim should be to identify and improve the scope of existing environmental and social
credentials. Use of LED lighting and HVLS fans are some examples of sustainable upgrades in
the existing warehouses.

ESG Certification
Certification programs give a stamp of approval and provide guidance as to what measures
should be taken for a warehouse to be sustainable. EDGE (Excellence in Design for Greater
Efficiencies) is a green building certification system focused on making buildings more
resource efficient. It enables developers and builders to identify the most cost-effective
strategies to reduce usage of energy, water and embodied energy in materials. GBCI (Green

Indian Warehousing Market: Present and Future

23
Building Certification Inc.) administers EDGE Certification in most countries around
the world. In India, IGBC (Indian Green Building Council) Green Logistics Parks and
Warehouses rating system addresses green features and operational aspects through
their detailed guidelines and certification. IGBC rating systems recognizes achievement in
green design, construction & operations, and platinum rating benchmarks applicants with
international standards.

Commercial Benefit: The ESG compliant projects are receiving discounts in their lending
rates from Lending Institutions as well as incentives and subsidies from Central and State
government authorities to setup environmental protection infrastructure.

3. Cold Chains in India

The Coldchain
3. cold Chains in Indiain India is still at a nascent stage. There are approx. 8,260 cold storage
industry
facilities
The coldwith
chainaindustry
capacity of 39.5
in India million
is still MT (source:
at a nascent PIBare
stage. There by approx.
Ministry8,260of Agriculture & Farmers
cold storage facilities
Welfare on Cold of
with a capacity Storage Facilities
39.5 million in the PIB
MT (source: Country, MOFPI
by Ministry Annual Report
of Agriculture & Farmers2021-22)
Welfareavailable
on Cold in
theStorage
country in 2021
Facilities which
in the are MOFPI
Country, largelyAnnual
used Report
for storing perishable
2021-22) available inhorticulture
the country inproduce (83%)
2021 which
are largely used for storing perishable horticulture produce (83%) such
such as fruits and vegetables. The Indian cold chain market was estimated to be worth USDas fruits and vegetables. The
Indian
20.4 cold chain
Billion in 2021marketandwasis estimated to be worthtoUSD
further projected 20.4USD
reach Billion
47inBillion
2021 and byis 2027,
furthergrowing
projectedat a
to reach
CAGR USD (Source:
of 15% 47 BillionIMARC
by 2027, growing
- Indian at a CAGR
Cold Chain of 15%
Market: (Source:
Industry IMARC
Trends, - Indian
Share, Cold Chain
Size, Growth, Market: and
Opportunity
Industry Trends, Share, Size, Growth, Opportunity and Forecast 2022-2027).
Forecast 2022-2027).

Cold Storage Utilization in India, 2021

Processed Food
Products
9%
Animal Husbandry
39.5 Products
7%
MMT Pharmaceutical
Horticulture & Products
Agri-based 1%
products
83%

Source: PIB by Ministry of Agriculture & Farmers Welfare on Cold

Storage Facilities in the Country, MOFPI Annual Report 2021-22

Although,
Although,cold
cold storage contributes
storage contributes 43.7%
43.7% oftotal
of the the total revenue
revenue fromcold
from Indian Indian
chaincold chain36%
industry, industry,
of
the cold storages in India have a capacity below 1,000 MT.
36% of the cold storages in India have a capacity below 1,000 MT. The cold chain potential
The cold chain potential remains untapped
due to the
remains followingdue
untapped reasons:
to the following reasons:

1. 1.High
Highshare
shareof
of single
single commodity
commoditystorage
storage
2. High initial investment for land and refrigerator units
2. 3.High
Lackinitial
of necessary enabling
investment forinfrastructure
land and refrigerator units
4. Lack of awareness for handling perishable goods
3. 5.Lack of necessary
Lapses in service byenabling infrastructure
storage and/or transportation providers leading to inferior quality goods

Cold storage facilities are hugely capital intensive but can fetch yields of around 12% and higher
rental premium of 3 to 4 times than
Indian that of conventional
Warehousing warehouses.
Market: Present and Future
Growth Drivers:
24
1. Growth in Organized Retail
4. Lack of awareness for handling perishable goods

5. Lapses in service by storage and/or transportation providers leading to inferior quality

goods

Cold storage facilities are hugely capital intensive but can fetch yields of around 12% and
higher rental premium of 3 to 4 times than that of conventional warehouses.

Growth Drivers:
1. Growth in Organized Retail

Organized retail and food service industries have emerged as the new cold chain segments,
majorly due to changing consumption patterns. Consumers have more access to a large
variety of fresh fruits and vegetables, dairy products, meat and poultry products and other
temperature sensitive commodities that require cold chain infrastructure. Organized retail
players have also acknowledged that setting up of a strong cold chain infrastructure is a key
step in efficiently managing their supply chains.

2. Growth in Food Processing Industry

The Indian food processing industry accounts for 32% of the country’s total food market
and contributes 13% of India’s exports and 6% of total industrial investment (Source:
IBEF). The industry is critical from the economic perspective; therefore, the government is
focusing on its development. This will result in boosting of cold chain infrastructure, which
will in turn reduce wastage in the supply chain.

3. Pharmaceutical Sector

India caters to over 50% of global demand for various vaccines. 40% of generic drugs
demand in the USA and 25% of all medicines in the UK are served from India. The sector
is expected to grow to USD 100 Billion by 2025 (Source: IBEF). Being highly susceptible
to temperature and time requirements, cold chain forms backbone for the pharmaceutical
industry.

Moreover, India needs to significantly ramp up its cold chain facilities for the safe delivery
of vaccines for mass immunization against COVID-19. A vast portion of cold storage
units available in India are used for agricultural produce, and very few are pharmaceutical
compliant according to WHO guidelines. This has generated a huge demand for cold
chain in India, and the government is roping in private cold chain operators to meet this
requirement.

Indian Warehousing Market: Present and Future

25
4. Government Support
Recent cold chain projects:
Scheme Number of Projects Investment Grant
Scheme for Integrated Cold 350 Cold Chain INR 9,564 Crores INR 2,640 Crores
Chain & Value Addition infrastructure
Infrastructure projects
Pradhan Mantri Kisan 27 Cold Chain INR 743 Crores INR 208 Crores
Sampada Yojana (PMKSY) projects
Backward & Forward 8 Projects INR 62 Crores INR 15 Crores
Linkages
Source: PIB by Ministry of Agriculture & Farmers Welfare on Cold Storage Facilities in the Country, MOFPI Annual Report 2021-22

4. Multi-Storey Warehouses as the next step in Logistics

Multi-storey warehouses in urban areas, enable companies to mitigate the high cost of
land, and maximize the potential of land as well as built-up area, making it an attractive
proposition for occupiers who want easy access to their end consumer base. The boom in
e-commerce has led to the increase in demand for urban warehousing & logistics spaces;
hence to developers and investors looking at multi-storey warehouses as the next step in
urban logistics.

Ramp-up access multi-storey warehouse is winding up as the future of warehousing,

which is built vertically with wide ramps and docks on multiple floors for the easy
navigation of trucks and trailers to upper floors.

Presence of Multi-Storey Warehousing in Asia Pacific Region

Multi-storey warehouses have existed in the Asia Pacific region for many years, particularly
in the more developed countries such as, Singapore and Hong Kong, where dense population
and limited land availability has made them a necessity. Interestingly, the space maximization
potential of this asset class has helped their acceptance in China.

Multi-storey facilities in the APAC region offer significant advantages in the form of proximity
to consumption centers, special business zones, and container terminals.

Some of the successful multi-storey facilities in the APAC region include ATL Logistics Centre
(Hong Kong), Goodman Qingpu Centre (Shanghai), Goodman Interlink (Hong Kong),
Prologis Park Narashino 4 (Narashino, Japan), ESR Kunshan Huaqiao Park Phase 3
(Shanghai, China), and Prologis PLD SIN Logistics Centre 2 (Singapore).

Indian Warehousing Market: Present and Future

26
These facilities have the following typical parameters for their successful operations:
●● Geographical Significance: Located in the areas with land shortage and constraints
●● USP Features: Drive-in cargo logistics center for faster turnaround of cargo, Easy
access to transport hubs, High land utilization efficiency, Dedicated cargo entrance to
international airport
●● Vehicular Access: Ramp Access for container trailers
●● Built-up Area: Ranging between 0.25 Mn Sq.ft. to 1 Mn Sq.ft. with some of the facilities
going up to 10 Mn Sq.ft.
●● No. of Floors: Generally, from G+1 to G+3 with some of them going up to G+12
●● Clear Height: 7.5 m to 9 m
●● Loading Capacity: 2 tons/ sq.m. to 3 tons/ sq.m.
●● Facilities: Cargo elevators, Cargo handling, CFS & distribution services

Land limitations in countries such as Singapore and South Korea, and populous metros like
Hong Kong and Tokyo have resulted in costliest warehousing markets in these countries.
Rentals as well as operational expenses could be reduced in these expensive locations by
developing multi-storey warehouses. Higher cost efficiencies can be achieved by increasing
number of floors as these provide more leasable floor area.

As observed in Asia Pacific case studies, accessibility to higher floors by ramps is a critical
success factor for multi-storey warehouses. 2-storey warehouses need ramps for the
movement of forklifts and those with more than 2 floors require wider ramps for trailers.

Future of Multi-Storey Warehousing in India

Potential for Multi-Storey Warehousing: Indian warehousing market has the potential
to shift towards the multi-storey warehousing on back of the increasing demand from the
e-commerce sector to be located close to their consumer base and to efficiently utilize the
land area. This can kick-start the demand for tech-enabled multi-storey warehousing, which
can facilitate maximum land utilization in cities having limited land supply as well as help
companies to reduce transportation costs and time. Cities such as Mumbai, Bengaluru and
Kolkata have the potential to attract Multi-Storey Warehouses as they have constrained land
supply and higher land rates.

Challenges and Future: The permissible FSI for warehousing is lower than the desired FSI
for multi-storey warehousing in Indian cities. Lower permissible FSI restricts warehouses
from going higher which does not allow cost optimization. But, with growing population,
space constraints and increasing land prices, multi-storey warehousing system can emerge in
the Indian warehousing market in the near future.

Indian Warehousing Market: Present and Future

27
 Conclusion
The resilience of the industrial and warehousing market was tested as the COVID-19 pandemic
hit India’s economic growth trajectory. After showing resilience in 2020, the warehousing
market has recovered in 2021 with the demand reaching pre-COVID times. Warehousing in
India is currently in the process of transformation due to improved quality of warehousing
spaces (primarily Grade A space), demand for larger boxes and positioning of warehouse
location.

●● Major global funds have invested with warehousing developers and operators in
order to expand their reach and regional footprint, being the key differentiators in the
sector.

●● These investments are not restricted to Tier 1 cities, they are also spreading across Tier
2 and 3 cities which are now emerging as major consumption and e-commerce hubs.

●● 3PL and E-Commerce have become one of the fastest growing segments in
warehousing space, contributing more than 50% of total net absorption in
2021, highest among all the other sectors. COVID-19 has accelerated e-commerce
adoption rates, leading to an increase in the demand for online delivery of essential
and non-essential items. Demand from 3PL has increased as different sectors such as
e-commerce, engineering, electronics & white goods are routing through 3PL.

●● The potential for developing large warehouses is primarily leveraged by the institutional
Grade A developers by constructing high quality spaces to meet the specialized needs of
their tenants.

●● As the e-commerce is deeply ingrained in the busiest commercial, retail and residential
areas, in-city warehouse space is gaining importance for rapid deliveries to end users.
Constrained supply of space is also driving re-positioning or change in use of existing
assets such as malls, high-street retail, marriage halls, auditoriums, showrooms and
workshops.

●● Furthermore, the advent of e-commerce has had a significant impact on the Indian
warehouse scenario. Omni-channel retailing is emerging to optimize inventory
management costs, operating costs, and real estate costs while increasing brand
awareness and consumer base across the country.

Indian Warehousing Market: Present and Future

28
There are some noteworthy trends that are shaping the future of India’s logistics and
industrial sector.

●● Private equity-backed warehousing companies are capturing a substantial part of the

growth in the warehousing sector. These warehousing developers typically eye an entry
yield of 9%-10% and IRR (internal rate of return) of 18%-20%. This will push the
warehousing rents for corrections and grow at ~5% annually in the next 4 years.

●● Projects that meet ESG standards are experiencing easier planning process, tenant
retention, and investor trust. Thus, developers have recognized that it is advantageous
to consider ESG parameters at the time of master planning, designing and construction
stage to avoid higher costs for future revamping.

●● The Indian cold chain industry is also transforming post COVID-19 considering the
growth food and pharmaceutical growth. Organized retail and food service industries
have also emerged as the new cold chain segments, majorly due to changing consumption
patterns.

●● Another potential that the Indian warehousing market has is to shift towards the multi-
storey warehousing. This is due to the increasing demand from the e-commerce sector
to be located close to their consumer base. This can push the demand for multi-storey
warehousing which can facilitate maximum land utilization in cities having limited land
supply as well as help companies to reduce transportation and logistics costs and time.

The Indian logistic and industrial sector is maturing, and developers have started to include
quality space and infrastructure in their portfolio. In the recent years, the sector has seen
tremendous expansion and significant transformation trends across the country which is
expected to continue in the future years.

Indian Warehousing Market: Present and Future

29
 About JLL
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and
investment management. JLL shapes the future of the real estate for a better world by using
the most advanced technology to create rewarding opportunities, amazing spaces, and
sustainable real estate solutions for our clients, our people, and our communities. JLL is a
Fortune 500 company with annual revenue of $19.4 billion in 2021, operations in over 80
countries, and a global workforce more than 98,000 as of December 31, 2021. JLL is the
brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further
information, visit jll.com

About JLL India

JLL is India’s premier and largest professional services firm specializing in real estate.
The Firm has grown from strength to strength in India for the past two decades. JLL India
has an extensive presence across 10 major cities (Mumbai, Delhi NCR, Bengaluru, Pune,
Chennai, Hyderabad, Kolkata, Ahmedabad, Kochi, and Coimbatore) and over 130 tier-II and
III markets with a cumulative strength of close to 12,000 professionals. The Firm provides
investors, developers, local corporates, and multinational companies with a comprehensive
range of services. These include leasing, capital markets, research & advisory, transaction
management, project development, facility management and property & asset management.
These services cover various asset classes such as commercial, industrial, warehouse and
logistics, data centers, residential, retail, hospitality, healthcare, senior living, and education.
For further information, please visit jll.co.in

Business Enquiries
Yogesh Shevade
Head – Logistics & Industrial, India
Yogesh.Shevade@ap.jll.com

Authors
Charmy Shah
Senior Executive – Logistics & Industrial, India
Charmy.Shah@ap.jll.com

Sujash Bera
Director – Logistics & Industrial, India
Sujash.Bera@ap.jll.com

Acknowledgement
We acknowledge the strategic inputs from Chandranath Dey, Yogesh Shevade, Debashis Dutta,
Aritra Das and Logistics & Industrial city transaction teams for the on-ground transaction
validation, technical updates and critical inputs provided by them.

Indian Warehousing Market: Present and Future

30
 About ASSOCHAM
The Knowledge Architect of Corporate India

The Associated Chambers of Commerce & Industry of India (ASSOCHAM) is the country’s
oldest apex chamber. It brings in actionable insights to strengthen the Indian ecosystem,
leveraging its network of more than 4,50,000 members, of which MSMEs represent a large
segment. With a strong presence in states, and key cities globally, ASSOCHAM also has more
than 400 associations, federations, and regional chambers in its fold.

Aligned with the vision of creating a New India, ASSOCHAM works as a conduit between
the industry and the Government. The Chamber is an agile and forward-looking institution,
leading various initiatives to enhance the global competitiveness of the Indian industry, while
strengthening the domestic ecosystem.

With more than 100 national and regional sector councils, ASSOCHAM is an impactful
representative of the Indian industry. These Councils are led by well-known industry leaders,
academicians, economists and independent professionals. The Chamber focuses on aligning
critical needs and interests of the industry with the growth aspirations of the nation.

ASSOCHAM is driving four strategic priorities – Sustainability, Empowerment, Entrepreneurship

and Digitisation. The Chamber believes that affirmative action in these areas would help drive
an inclusive and sustainable socio-economic growth for the country.

ASSOCHAM is working hand in hand with the government, regulators, and national and
international think tanks to contribute to the policy making process and share vital feedback
on implementation of decisions of far-reaching consequences. In line with its focus on being
future-ready, the Chamber is building a strong network of knowledge architects. Thus,
ASSOCHAM is all set to redefine the dynamics of growth and development in the technology-
driven ‘Knowledge-Based Economy. The Chamber aims to empower stakeholders in the
Indian economy by inculcating knowledge that will be the catalyst of growth in the dynamic
global environment.

The Chamber also supports civil society through citizenship programmes, to drive inclusive
development. ASSOCHAM’s member network leads initiatives in various segments such as
empowerment, healthcare, education and skilling, hygiene, affirmative action, road safety,
livelihood, life skills, sustainability, to name a few.

Indian Warehousing Market: Present and Future

31
NOTES
The Associated Chambers of Commerce and Industry of India
4th Floor, YMCA Cultural Centre and Library Building
01, Jai Singh Road, New Delhi-110001
Tel: 011-46550500 (Hunting Line) • Fax: 011-23017008, 23017009
Web: www.assocham.org