Warehousing capacities created by e-comm firms to take 18 to 24 months to get absorbed: Horizon Industrial Parks CEO

Warehousing capacities created by e-commerce firms will take 18-24 months for a demand uptick from the segment , said a senior executive at Blackstone’s logistics company, Horizon Industrial Parks.

“The share of e-commerce in Indian warehousing has come down to low single digits from double digits in FY19,” Rahul Pandit, chief executive at Horizon Industrial Parks, said.

E-commerce demand is sitting at the bottom of the pile. Also, third-party logistics (3PL), direct-to-consumer, and retail and industrial, have grown their shares, he said.

Warehousing demand by e-commerce companies has come down as the firms used warehousing in big numbers during the pandemic, experts said.

Also read: Taiwan footwear maker Pou Chen to set up plant in Tamil Nadu

“We’re seeing strong consumption growth in India in areas like retail, fashion and footwear, which is driving demand for warehouses,” Pandit said.

Since inception, Horizon has added a portfolio of 3.7 million sq ft to its existing portfolio and is building another 5 million sq ft with a capital outlay of `4500 crore.

“Total warehousing stock will increase significantly over the next two years, and we expect Horizon’s portfolio to grow faster than the market,” he said, adding that they will double the operating portfolio in the next two years.

Last year, Horizon acquired two development portfolios, including two operating assets in the country.

“Ideally, we want to acquire operating and brownfield properties, but there is a dearth of good quality assets, we have therefore taken on the mantle of being developers in this asset class,” he said.

Also read: Godrej Group’s NBFC arm announces new platform Nirmaan to offer these services to MSMEs

Pandit said the company is quite excited about electric vehicles, photo-voltaic and cold storage, and increased demand for BTS (built-to-suit) properties.

Construction costs have gone up, given the market volatility. With rising interest rates and input costs, the sector’s yields have been constrained by 150-250 basis points. “We experience a supply chain pricing lag as our customers build efficiency and share costs with their consumers,” he said.

“Demand for the last mile and in-city warehousing will explode due to rapid urbanisation and goods moving online. Time and proximity to customers have become essential.”

Blackstone has a global warehousing portfolio of 1.2 billion sq ft, which is 37% of its total real estate portfolio. The country has a stock of 370 million sq ft against 13 billion sq ft in the US.

Horizon’s operating portfolio is at 100% occupancy, with upcoming supply substantially pre-leased and a robust demand pipeline. It is creating a 400,000 sq ft bespoke urban fulfilment centre for a global e-commerce major in Delhi, which will be the first facility of its kind in the country.

It is also constructing a BTS unit for a specialty chemicals company in Hyderabad, cold storage and EV facilities in Tamil Nadu, an automotive components factory in Pune, and has just handed over a 470,000-square foot warehouse in the NCR to a global 3PL serving a European fashion major.