E-retail drives warehousing space demand: CBRE

Emerging retail segment took up approximately 1.7 million sq ft of warehousing space across Mumbai, Chennai, Bangalore and the Delhi National Capital Region in 2014.
E-retail drives warehousing space demand: CBRE

New Delhi: Almost 25% of the total logistics space uptake across the country in 2014 was by e-retail companies and the uptake of warehousing space shot up by more than seven times over that of 2013.

Emerging retail segment took up approximately 1.7 million sq ft of warehousing space across Mumbai, Chennai, Bangalore and the Delhi National Capital Region in 2014, according to CBRE Research.

The last couple of years also saw the segment becoming a new addition to the mix of major office space demand drivers in India, as online retailers increased their footprints for front-end as well as back-end requirements.

By the end of 2014, approximately 3.5 million sq ft of office space had either been leased or was in various stages of negotiation by e-commerce firms across the country—a growth of more than 400% y-o-y.

'While macro level changes will benefit e-retailing, the momentum reported in the segment over the past couple of years also calls for a detailed regulatory framework to drive it forward,' says Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia.

The year 2014 saw investments worth more than $2.2 billion being raised by e-retail majors in India.

Growth in the e-retail segment is likely to stimulate demand for warehousing/logistics space as well as commercial office space. Funds—both off-shore and domestic—have begun to gain a foothold in the segment.

A significant share of fresh foreign fund inflow is expected to get channelized into building warehouses and expanding supply chain, as well as into possible acquisitions.

Key e-commerce players have also been observed to spread their wings towards tier II cities from their tier I hubs.

Tier II and III cities and towns in India are ripe for the picking, mainly because of the relative absence of organized retail in these markets.

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