Pune’s warehousing industry keeps COVID blues at bay

Pune has benefited from the ever growing warehousing demands of the e-commerce and third party logistics sectors.

Despite the ongoing economic recession, Pune’s growth as a warehousing and logistics hotspot seems on track. The city, which has seen a 42 per cent year-on-year growth in terms of warehouse transactions, has benefited from the ever growing demand from e-commerce and third party logistics sectors.

Pune had reported the highest growth in warehousing transaction in the country in the last financial year.

Pune’s emergence as a logistic major has to do with the changing nature of the industry as well as the demand from ecommerce companies. Most companies prefer to rent out warehousing spaces rather than invest their land resources towards it. The growing demand from the sector has seen the Maharashtra Industrial Development Corporation (MIDC) investing portion of its industrial land in Chakan Talegaon industrial area for the development of logistics parks.

Realty firm Knight Frank’s recent report about the warehousing scenario also bolsters Pune’s image as warehousing major. The report states that nationally, the sector has seen a compound annual growth rate (CAGR) of 44 per cent since 2017. Pune, the report said, has seen 4.9 million square feet of transactions in the financial year 2020, with a CAGR of 35 per cent since 2017.

Third party logistics, ecommerce and manufacturing are the top three sectors in terms of transactions, with 36, 23 and 23 per cent transactions in financial year 2020 respectively. Ecommerce has emerged as the fastest growing sector with a 55 per cent CAGR since 2017. Across the country, around 50 million square feet of space is occupied by this sector.

Depending upon facilities like insulation, fire fighting system and ground coverage, warehouses are classified as Grade A and B. While nationally, 64 per cent of the warehouses available are classified as grade B, the equation seems to be opposite in Pune. Around 71 per cent of warehouses in Pune are grade A. Nationally, 15.5 per cent of the warehouses have reported vacancies, which in Pune is 21.8 per cent.

At present, Pune has 26 million square feet of warehousing stock with a potential of 42 million square feet further. Year-on-Year rent in grade A warehouses has seen a rise of 4-7 per cent.

The sector’s sunshine phase, however, the report says, could run into rough weather in the next financial year, given the COVID-induced slowdown.

Source: https://indianexpress.com/article/cities/pune/punes-warehousing-industry-keeps-covid-blues-at-bay-7098426/lite/

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