To address the growing demand for storage space from e-commerce and third-party logistics companies, Bengaluru suburbs require over 250 acres of land space to construct additional warehousing facilities, according to Sotheby’s International Realty.

Bengaluru is expected to witness a surge in investments in developing a premium warehousing park to meet the growing demand for storage space.

Demand-supply trend

The demand-supply trend of the last five calendar years (2018–22) shows that demand has outstripped new supply by far. The cumulative absorption of warehousing space in Bengaluru during the 2018–22 period stood at 16.34 million sq ft, while the new supply was 10.5 million sq ft, noted CRE Matrix.

“Based on the anticipated rise in demand, we project that more than 250 acres of land would be required in the periphery of Bengaluru city to develop new warehousing facilities,” said Gagan Randev, Executive Director, Capital Markets, India Sotheby’s International Realty.

Market rentals

Moreover, the city has also noted a rise in market rents within the sector. In 2022, market rentals experienced a remarkable increase of 10 per cent, surpassing the average rental hikes of 5–6 per cent witnessed in previous years.

“This upward trajectory indicates a further tightening of the market. As a result, owners have gained the advantage of negotiating more favourable rental terms with new occupiers. The considerable rise of 10 per cent in market rentals, compared to the in-place rental increase of 2 per cent in 2022, clearly reflects this positive trend,” stated Harikesh Ananthamurthy, Senior Vice President, Capital Markets, India, Sotheby’s International Realty.

In addition, manufacturing, logistics players, e-commerce, and retail sectors will continue to drive warehousing demand, with logistics players and e-commerce emerging as major occupiers.

Prominent players such as All Cargo, Welspun, IndoSpace, Prologis, Panattoni, RMZ, The House of Hiranandani, Lodha (Macrotech), ESR, CapitaLand, Morgan Stanley, Horizon Industrial Parks, and Greenbase are aggressively expanding their presence in the warehousing segment.

Furthermore, the demand for land in Bengaluru is expected to be evenly distributed among different clusters, facilitated by the city’s expansion and peripheral ring road, allowing for seamless transfer between clusters and consumption centres.

The involvement of larger organised players in the sector has driven a shift towards automation, IoT integration, enhanced warehouse management systems, security measures, and a focus on creating greener and more sustainable built environments, according to Randev.

The company has published a white paper named ‘Ahead of The Curve - Bengaluru Warehousing’ with inputs from real estate data research company CRE Matrix.