e-commerce drives demand for warehousing, office space

According to a property consultant, almost 25% of the total warehousing space uptake across the country in 2014 was by e-retail players

Demand for warehousing and office space picked up in 2014 on the back of growth in e-commerce segment that led to increased leasing by e-retailers, property consultant CBRE said today.

"Almost 25% of the total warehousing/logistics space uptake across the country in 2014 was by e-retail players, while the uptake of logistics space rose by more than seven times over that of 2013," CBRE said in a statement.

The consultant, in its report India Online Retail Driving Realty, said absorption of warehousing space by e-retailers has increased to 17 lakh sq ft in 2014 from 2.3 lakh sq ft in the previous year across leading cities such as Mumbai, Chennai, Bangalore, Kolkata and Delhi NCR.

"The growth in e-retailing has spawned growth in organised real estate as well - particularly in logistics infrastructure and large office spaces...While warehousing has been a key beneficiary of the E-commerce boom, ripples have also been felt in the office space market," CBRE said.

By 2014-end, CBRE said about 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% year-on-year.

As a centralised warehousing segment does not auger well for a sector that has such widespread demand, e-commerce players are also looking to expand their production and distribution networks across smaller cities and towns.

Commenting on the report, CBRE South Asia CMD Anshuman Magazine said, "The statistics of this report are proof of the increase in infrastructure development within India along with industry-specific aspects, such as the depth of internet penetration, and the development of core infrastructure such as highways and new warehousing facilities".

While such 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, he added.

The report further said that funds, both off-shore and domestic, have begun to gain a foothold in the e-retail segment too. The year 2014 saw investments worth more than $2.2 billion being raised by e-retail majors in India.

A significant share of fresh foreign fund inflow is expected to be utilised into building warehouses, expanding product lines, upgrading and expanding the supply chain, as well as into possible acquisitions.