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Riding on the comfort of a surging e-commerce business, Kochi’s warehousing transaction volume has witnessed remarkable growth, the second highest among the secondary markets.
The transaction volume in the warehousing market in the city has reached 0.9 million sq ft in FY23 up from 0.3 million sq ft in FY22 with a y-o-y growth of 239 per cent, says ‘India Warehousing Market Report – 2023 prepared by the property consultancy firm Knight Frank India.
The development of top-notch pre-engineered warehousing facilities in Kochi has accelerated in recent years due to the proliferation of e-commerce firms such as Flipkart. The jump in transaction volumes has dramatically reduced market vacancies, and queries for built-to-suit facilities have gone up in FY23, the report said.
With respect to the industry-split transactions, the report pointed out that 53 per cent share (0.5 million sq ft) was transacted by Flipkart in FY23. The retail industry was the second-most active in the market with 27 per cent share of the total leasable space during the year.
AM Sikander, CEO, Sitics Logistics Group cited a combination of factors for the increase in warehouse transaction volume, which would go up consistently in the coming years. He said that Kerala’s per capita consumption expenditure growth is about 12 per cent, which is the highest in India. This led to an increase in requirements for new warehouse spaces, especially in the FMCG and retail segments. And, the brands are willing to be closer to the customer as the time to market has become one of the key criteria for customer satisfaction, which otherwise would have got delivered from the neighbouring states, he said.
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Kerala’s e-commerce growth is more than 30 per cent, which is increasing the requirement for warehouse spaces for the ecom companies. More than 2/3 of Kerala’s population carries a smartphone, which is amplifying the e-commerce growth in the State, he added.
Increased demand
Rentals for Kochi warehousing facilities range between ₹194-237/sq m/month (₹18-22/sq ft/month) in prominent warehousing locations such as North Paravur, Ernakulam, Kalamassery, Varapuzha, Koonammave, Eloor, Vytilla, Edapally, Perumbavoor, etc.
Rents for Grade-A warehousing facilities such as those taken up by Flipkart, GSK, and Pepsi remained in the range of ₹205-248/sq m/month (₹19-23/sq ft/month), while rents for Grade-B warehouses stood in the range of ₹172-215/sq m/month (₹16-20/sq ft/month).
The report assessed warehousing leasing across eight primary markets and 17 other secondary markets in India. The surge in activities from the Third-party logistics (3PL), manufacturing, and retail sectors contributed to the increased demand for warehousing.
Also Read: E-comm, consumer Internet sector raised $15.4 b in 2022: Report
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