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Growing Popularity of Modern Warehouses and Industrial Segment among Investors

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Following the Covid-19 pandemic, there is a revolving wave of facts and ideas on the long-term impacts on commercial real estate. Many experts are predicting what will happen in the nearing future.

Warehouses, distribution centers, logistics centers, flex spaces, and other commercial buildings with storage facilities are among the properties in the industrial real estate market that are undergoing fundamental changes today. Economic dynamics, occupant demand, last-mile shipping, consumer returns, and accelerated technological innovation are reshaping warehouse and industrial building demand and design. The emphasis is on creativity, the creation of smarter infrastructure, and the improvement of existing properties’ functionality and/or repurposing.

Warehouse and industrial facilities are being leased at an increasing pace by developers and tenants nationwide, with forecasts indicating continued expansion. Industrial Warehousing continues to be the topmost preference of the investor.

E-Commerce – Supporting the expansion of Warehouses

E-commerce has ushered in a modern economic revolution. Last-mile fulfillment centers are replacing manufacturing, recycling, and assembly plants to handle the supply of new goods to customers. Previously used for scrap metal yards, packaging, construction, and auto salvage, industrial areas in cities are now being repurposed for home delivery grocers and other same-day e-commerce companies. As retailers gear up to satisfy customer expectations, last-mile distribution requirements have prompted a revival in warehouse demand.

E-commerce, rather than any other end-use market for warehousing, has seen a massive increase in the last three years. This is in accordance with the sector’s expansion in India. Many e-commerce companies started to use in-city warehousing to cut perishable product shipping times and to circumvent transport limits placed on inter-district transportation. In-city warehousing is becoming a critical infrastructure need, especially in major distribution centres where distribution times are dwindling from “next day” to “2 hours.”

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The pandemic has undeniably boosted e-commerce, and many customers are unlikely to change their preferences as a result of it. This is raising significant challenges on last-mile delivery, in particular.

The pace at which customer patterns are changing as a result of the pandemic is unprecedented. E-commerce revenues will begin to rise as market expectations and patterns change, and so will demand for warehouse assets. All key customer segments are increasing their e-commerce shopping, whether it’s for comfort, dry products, perishables, wearable, or electronics.

Experts carefully define and scrutinize targeted customers prior to being analyzed and chosen in today’s manufacturing environment, location, and logistics. Last-mile tenants also compare locations using a complex best-in-class matrix. Architects and consultants that specialize in warehouse efficiency and construction modalities are used by e-commerce companies.

E-commerce and last-mile warehouse tenants no longer look at rent as the most important consideration. Premium rent areas, such as those with effective loading, parking, and ceiling heights for advanced sorting systems, can be compensated by analyzing logistic costs.

Digital Strategies and Industrial Revolution

Digital solutions will continue to include key market functions and procedures, such as servicing clients and storing inventory, in the future, and a variety of technologies — such as the Internet of Things, cloud storage, robotics, and digital goods and services — can be used to do that. Companies will certainly have to digitally evolve at a rapid speed as the pandemic fades and industry returns to normal.

The pandemic has demonstrated the risks of just-in-time, single-source supply chain management in the warehousing sectors. Many businesses would have to reconsider their lean production activities.

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Final Words

The days have gone when warehouses only had storage for a few specific goods that were delivered in a range of just 50-mile radius. Keeping in mind current scenario and in order to fulfill the demands of its clients, warehouses would need to accommodate much more dynamic and varied operations — this is feasible only by adopting strategic patterns and planning for the future of storage beforehand.

Consumers are now seeking more in retail era with personalized satisfaction. Whether it is B2C or B2B sales, when it comes to product distribution and specially related to health care and hygiene, consumers are intensely concentrated on value. Experts agree that warehouse developments would include an uptick in drop shipping, quicker turnaround time and even sharper rise in value-added services to fulfill consumer demands.

To stay up to the growing warehousing patterns in warehouses, businesses need to ensure they operate optimally from inside their warehouses. To maximize power, storage and service productivity is critical to optimizing storage space. Warehouses will implement carousels in vertical storage, custom shelves, flat storage structures and more in order to construct a secure and reliable storage area.

The entire supporting system must be tailored for large-scale acceptance and exponential growth for any business to thrive. All of the supporting elements for the warehousing sector in India have come together – favorable government policies, vast volumes of private money, enabling trunk infrastructure, and, most notably, end-user adoption. With all of these expansion elements riding up to full speed, the time has come for India’s modest, unsightly godown to be transformed into a highly integrated modern warehouse. With a solid upward trend line, the warehouse is now at the centre of developers and tenants.

Article by – Jas Simran Singh, Group Director at Realistic Realtors

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