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Next Big Wave Of Growth: Industrial & Logistics Sector

Given the fast pace at which the demand is growing, future scalability with respect to industrial and warehousing space is emerging as a significant challenge.

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Given the fast pace at which the demand is growing, future scalability with respect to industrial and warehousing space is emerging as a significant challenge.

Last year, with the onset of the global pandemic, the next big wave of growth has been seen for the Industrial and Logistics sector. It has proven to be one of the most resilient asset classes and continues to attract significant capital. The explosive growth will continue for the foreseeable future but with several new themes that are emerging:

  1. Explosive demand from e-commerce companies
  2. In-city warehousing solutions to address same day delivery
  3. Alignment with ESG aspirations
  4. Scalability in the same location to meet growth aspirations
  5. With scale, increasing need for integrated eco-systems beyond just warehousing

Pandemic and the resulting lockdowns introduced millions of consumers to the convenience of online shopping and fueled the demand for warehousing spaces from e-commerce companies. The shift in the purchasing behavior from offline to online shopping as well as the strong internet penetration across tier-1 and tier 2 cities, made e-commerce and 3PL companies re-evaluate their supply chains for higher efficiencies and last-mile delivery.

With customers going for online deliveries in categories such as perishable food items and groceries, the need for same-day delivery has never been more important. This has prompted companies to opt for in-city warehousing spaces that can help minimize their transportation costs and execute faster delivery timelines.

Sectors like manufacturing, automobile, pharma, etc. have also evolved dramatically over the last few years, consequently driving consumption and demand for professionally managed Grade-A spaces and high quality sustainable infrastructure. With a strong focus on ESG goals, companies prefer partnering with brands that can offer sustainable solutions in the logistics and warehousing space.

Given the fast pace at which the demand is growing, future scalability with respect to industrial and warehousing space is emerging as a significant challenge. With limited space within the existing parks, businesses are often forced to settle for alternate spaces, far from the city. There is a growing preference for industrial and warehousing solutions that are designed with easy scalability and expansion options in the same location that are aligned with the businesses’ future growth plans.

With the economy opening up, businesses are now considering a return to full capacity and bringing back any previously disengaged labor force. This resurgence has escalated the importance of being in proximity to a comprehensive and a ready social ecosystem with high-quality residences, social housing, world-class education, and healthcare for employees.

Global manufacturing companies are focusing on India as a favored manufacturing hub to establish an incremental supply base. The entry of these new global participants with limited/no presence in India will warrant an imperative need for Grade-A parks providing clean, marketable land titles, and assistance for all statutory approvals and permits for hassle-free onboarding. 

This accentuated interest from foreign investors and companies has resulted in the sector gaining prominence as a growth driver for the economy. Creating jobs for millions of people across segments, the sector has pushed up collective incomes, and along with it, the local economy. 

DISCLAIMER: The views expressed are solely of the author and RealtyNXT.com does not necessarily subscribe to it. RealtyNXT.com shall not be responsible for any damage caused to any person/organisation directly or indirectly.

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