Navigating India's Warehousing Growth: A Look Back at 2023 and Ahead to 2024

The world of warehousing in India is changing fast, and as we step into 2024, it's important to look back at what happened in 2023 and what we can expect in the year ahead.

Big Growth in Warehousing:

In 2023, India saw a huge increase in the amount of space available for warehousing. Experts say that by the end of 2024, there will be a whopping 415 million square feet of warehouse space across the country. This growth in demand are primarily due to the following sectors - 

  • E-commerce:  Ecommerce businesses heavily rely on warehouses to store their inventory and fulfill customer orders efficiently. With the booming e-commerce market in India, the demand for warehouses from this sector is significant.
  • Manufacturing:  Many manufacturers need warehouses to store raw materials, finished goods, and work-in-progress inventory. This ensures a smooth production process and timely delivery of finished products.
  • Retail:  Retail businesses, especially large chains, often use warehouses to store bulk inventory and distribute it to their stores across the country. Warehouses help them maintain consistent stock levels and manage seasonal demands.
  • Logistics:  Logistics companies play a key role in moving goods across the supply chain. Warehouses are crucial for them to consolidate shipments, store goods in transit, and provide value-added services like packaging and labeling.

Food and Beverage:  This industry requires temperature-controlled warehouses to maintain the quality and safety of perishable goods. Warehouses also help with storage, packaging, and distribution of food and beverage products.

More Money Coming In:

Last year, we also saw big investors putting their money into building warehouses a lot more. These investors are backing projects financially, which means we can expect even more warehouses to be built in the future. It's a sign that people believe in the future of warehousing in India.

  • Blackstone Inc.: This global investment firm plans to more than double its holdings of Indian warehouses, reaching 100 million square feet in the next few years.*source
  • DP World: This Dubai-based logistics giant is investing in building warehouses in India, as it sees the potential for growth in the e-commerce and manufacturing sectors, global logistics operator DP World opened its 3.80-lakh sq ft warehousing facility at Bhiwandi, in Maharashtra, to cater to businesses in segments such as agriculture, pharmaceuticals, electric vehicles, and chemicals. The warehouse expanded DP World's total warehousing space to over 5-million sq-ft pan-India.
  • Metro Brands: This Indian footwear retailer is investing in building its own warehouses to improve its supply chain efficiency.
  • Zomato: This Indian food delivery company is also investing in building warehouses for their B2B business ‘HyperPure’ to store food items and other supplies.

The Indian government is also playing a role in the warehousing boom by creating a favorable environment for investment. The government's initiatives include the Make in India program, which is aimed at promoting manufacturing in India, and the National Logistics Policy, which is aimed at improving the efficiency of logistics operations in the country. These initiatives are expected to further boost demand for warehousing space in India.

New Markets Opening Up:

Finally, we're seeing businesses move into smaller cities, not just the big ones. Sectors like e-commerce and retail are spreading out to Tier 2 and 3 cities, creating a demand for good warehouses in those areas. This means building more warehouses outside of the big cities, so getting closer to the customers was one big trend we noticed in 2023 was the importance of being close to where customers are. With more people buying things online and wanting fast deliveries, companies need warehouses near cities to make sure they can get products to customers quickly. This is known as last-mile delivery, and it's becoming more and more important.

Building Warehouses Just Right:

Another big jump in warehousing demand was observed for "Built-to-Suit" (BTS) transactions in 2023 which meant companies are getting warehouses built specifically for their needs. This is seen happening in sectors such as retail, manufacturing, and others. Due to increase in demand for high quality and compliant Grade A space, especially in the BTS segment, the vacancy in Grade A space is expected to remain low, hovering around 5% in 2024.

Conclusion - Looking Ahead:

As we look to the future, it's clear that the warehousing industry in India is on the rise. Businesses need to be ready to adapt to changes and take advantage of new opportunities. By investing in modern technology, working together, and focusing on what customers need, we can make sure that the future of warehousing in India is bright and successful.

In summary, 2023 set the stage for what promises to be an exciting year for warehousing in India. With continued growth, investment, and innovation, the industry is poised for success in 2024 and beyond.

  • Industry analysts Assetmonk projects a Compound Annual Growth Rate (CAGR) of 10.49% for the warehousing sector from 2022 to 2028. This translates to significant growth in 2024 as well.
  • Economic Times sources suggest overall industrial and logistics leasing to grow by over 14% in 2024. Warehousing is a key component of this sector, so this indicates strong demand for space.

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