Warehousing companies, institutional investors pivot to meet shifting demands

A major transformation is underway in India's warehousing sector propelled by the convergence of industrial, e-commerce, and third-party logistics (3PL) companies, driving demand for specialised facilities like build-to-suit (BTS) warehouses, urban fulfilment centres, and warehouses in tier II cities and towns.

This is leading global and domestic warehousing firms and investors such as Blackstone, LOGOS, Welspun One, and Hiranandani Group to pursue strategic equity deals and implement streamlined financial deals to exploit this opportunity.

“India's demographic makeup, consumption trends, and promising economic growth prospects all point towards significant opportunities in logistics, warehousing, and industrial real estate. The government's comprehensive strategy to overhaul the logistics sector will undoubtedly bolster its growth potential,” said Asheesh Mohta, Senior MD & Head of Real Estate Acquisitions in India for Blackstone.


The global institutional investor is looking to more than double its warehousing portfolio in the country to 100 million sq ft from 40 million sq ft in the next 3-5 years.

“Warehousing has caught up rapidly in the last few years, particularly after the outbreak of Covid-19 pandemic, and is witnessing annual absorption of over 50 million sq ft, paralleling the trends seen in the office sector. Apart from the focus area of e-commerce, 3PL and industrial segments have also emerged as significant drivers of this expansion, attracting investments to fuel further growth,” said Gautam Saraf, MD-Mumbai, Cushman & Wakefield.

In addition to BTS warehouses, there is increasing demand for in-city fulfilment centres and warehouses located in tier-II cities and towns. As the e-commerce industry continues to thrive and consumer expectations for speedy deliveries increase, the need for strategically located distribution hubs becomes paramount to ensure last-mile delivery timelines.

Welspun One, the integrated fund and development management platform of Welspun Group, recently announced a more than Rs 600 crore investment plan for a Grade-A, in-city warehousing anchored mixed-use development at Wagle Industrial Estate in Thane near Mumbai.

"As businesses emphasize quicker order-to-delivery timelines, the availability of efficient logistics infrastructure located in proximity to customers becomes essential for meeting their operational needs," said Anshul Singhal, MD, Welspun One.

The company is looking to potentially create an aggregate portfolio of 16-18 million sq ft over the next 4-5 years across first and last-mile facilities in tier-I and II cities. The plan entails an overall investment outlay of over Rs 8,000 crore that can drive assets under management to $1 billion, Singhal told ET in an earlier interaction.

The construction timeline for warehousing projects is relatively shorter, ranging from nine to 12 months. This expedited timeline is made possible by the standardisation of Grade-A warehouse construction specifications, which streamline building processes and minimise delays. As a result, the construction risk in warehousing is significantly lower compared to other commercial real estate sectors.

According to industry experts, tenants are usually willing to pay a premium for bespoke features and operational efficiencies offered by these facilities, making them an attractive investment for sponsors.

In India, a favourable regulatory environment, along with the government’s support through policy and reforms, has started to boost spending in infrastructure and in turn, overall demand for modern warehousing.