Warehouse construction in India has witnessed significant positive trends over the past years. The rising demand for storage has accelerated the pace and volume of construction activity in the segment. Warehouses now incorporate various technologies, automation solutions and enhanced safety features. On the construction front, warehouse developers focus on sustainability, suitability and safety. The design and features of warehouses play a key role in businesses, ensuring that storage requirements are met while maintaining product quality.
Rising demand
The fast growing e-commerce segment is a key driver for warehousing demand. The expanding manufacturing segment has further increased the need for storage spaces. Government initiatives such as the National Logistics Policy and the PM Gati Shakti National Master Plan have provided an impetus to the segment. Saturation in Tier I cities has opened up growth opportunity in Tier II and Tier III cities.
The sector has witnessed a notable rise in demand for Grade A warehouses. These state-of-the-art facilities adhere to international standards in terms of quality, safety and efficiency. They are strategically located near logistics hubs and supply chain channels. They are designed to be future-ready, with features that allow operations to scale up or down. Customisation is also possible. These facilities offer more open spaces, and higher storage and floor heights. In addition, they have the infrastructural capabilities to accommodate and implement technologies for efficient operations within the warehouse.
According to Alvarez & Marsal, the demand for Grade A warehousing is expected to grow at around 12.5 per cent until 2029-30, taking the total Grade A stock to approximately 410 million square feet. The increase in the demand and supply for Grade A warehouses will be driven by e-commerce, retail expansion and the entry of global companies. Various players have announced plans for expansion. For instance, Allcargo Supply Chain Private Limited plans to add around 3 million square feet of warehousing space in the next two to three years.
Diversified models
Diversified portfolios of warehousing are emerging including built-to-suit warehouses, in-city warehouses and dark storage facilities, even in Tier II and Tier III cities. To meet the demand for quicker deliveries, it is essential to set up warehouses closer to consumption points, a trend spreading to Tier II cities.
One notable trend in warehouse construction is the rising number of in-city warehouses. The growing e-commerce segment and demand for faster deliveries have driven the construction of these warehouses. Their proximity to customers facilitates efficient and quicker last-mile delivery and reverse logistics while also promoting cost-effectiveness. Many of these facilities are repurposed commercial spaces. Further, many in-city warehouses are used as dark stores. Multi-storey warehouses are also emerging as viable solutions in areas with land availability constraints.
Recent developments include the launch of IndoSpace’s first in-city warehousing facility in March 2024 at Chembur, Mumbai, under the brand name INLOGIS. The facility, spanning more than 0.15 million square feet, with scalability options from 5,000 square feet to 35,000 square feet, aims to use vertical space development and has installed highly efficient cargo elevators and docking stations. The facility also targets sustainability with amenities such as EV charging stations, solar panels and waste management systems.
Another rising trend in warehouse construction is built-to-suit warehouses. These facilities are built and customised as per client requirements, ensuring that they meet specific requirements and are located in preferred areas. For example, in February 2024, Colliers India transacted a built-to-suit Grade A warehousing space in Mumbai for Metro Brands, covering an area of around 0.33 million square feet. Colliers was appointed to identify well-equipped modern spaces with features including a higher floor load capacity and automated material handling equipment. The project was designed and delivered by the RK Builders Group.
Technology trends
The rapid rise in demand has necessitated the adoption of various measures to enhance the efficiency of construction processes. The construction segment is witnessing the widespread use of pre-engineered buildings (PEBs). These are also being used in warehousing projects. PEBs are made off-site and assembled at location. Their ability to reduce overall construction time helps in meeting the rising warehousing demands efficiently. They also reduce labour and material requirements, proving to be a cost-effective solution. PEBs are capable of incorporating features such as energy-efficient insulation.
Warehouse construction projects also benefit from the use of building information modelling (BIM). BIM enables the visualisation of a three-dimensional model, enhancing the level of clarity and accuracy, and improving processes including decision-making. It also allows for the simulation of various scenarios, assisting in risk identification and optimisation.
Sustainability trends
The rising warehouse construction activity in the country necessitates the adoption of green practices, implementation of energy-efficient initiatives and optimised use of resources to ensure sustained growth. New warehouses place great emphasis on these measures, given their large energy requirements. Buildings made of concrete and cement are taking a back seat while PEBs with steel structures are increasingly being used. Another major step is tapping into renewable energy sources by installing solar panels. Energy savings are also ensured by maximising daylight use, creating effective ventilation systems and implementing roof insulation. In addition, various warehousing processes are being transformed through initiatives like reusing materials, avoiding the use of single-use plastics and adopting technology for continuous monitoring of green operations. This trend also extends to the supply chain through the use of EVs and other sustainable practices.
Warehouses are also targeting various certifications. The Indian Green Building Council (IGBC) launched the IGBC Green Logistics Parks and Warehouses Rating System for the rating of logistics parks and warehouses in the country, focusing on social, environmental and economical sustainability. Warehouses are also meeting other standards like Leadership in Energy and Environmental Design and Excellence in Design for Greater Efficiencies (EDGE).
Recent developments depict the sector’s adoption of these initiatives. In February 2024, Skoda Auto Volkswagen India Private Limited’s new parts expedition centre in Pune received the IGBC Platinum certification. The facility is expected to facilitate the export of complete knock-down parts for assembly in Vietnam. Some of the initiatives taken at the facility include water conservation, energy-efficient lighting and equipment, optimal orientation for solar power generation and waste management. It also features space-saving vertical gardens, and the use of EVs and charging stations for internal logistics and operations. Further, in June 2024, Brenntag, a global leader in chemicals and ingredients distribution, announced the opening of its new state-of-the-art green warehouse at Sonipat, Haryana. The facility, purpose-built by Harshna Agro Fresh Private Limited, a supply chain and logistics solutions expert, received the EDGE Advanced certification. The warehouse is a single-storey facility with ambient and cold storage and office spaces. It has specially insulated walls for energy efficiency. The use of natural lighting has been maximised in addition to implementing a well-designed ventilation system to minimise air conditioning requirements. The facility also includes solar panels and a water harvesting system.
In sum
Current trends depict rising demands for warehousing facilities, which in turn have increased construction activity in the segment. As a result, various types of warehouses have emerged, catering to diverse business and customer needs, and enhancing overall operations at these facilities. Furthermore, the implementation of technology and sustainability initiatives has transformed construction processes. Looking ahead, warehouse construction is poised to witness a notable upward trend, in line with rising demands.
