Tier II, III cities to emerge as preferred destinations for the warehousing industry as smaller cities gaining traction
At a time when the Indian economy has been facing a slowdown, the warehousing segment has emerged as a promising investment opportunity for investors. Restricted movement due to the nationwide lockdown has underscored the importance of in-city warehousing, with tier II and III locations emerging as preferred investment destinations. Though the supply of new warehousing space in 2020 could be merely 12 million sq ft as against the previous estimate of 45 million sq ft due to the COVID-19 crisis, in the long-term, the demand for warehousing space will grow significantly and there will be capacity addition in almost 30-35 new tier II and III cities.
These markets are still at a nascent stage and are contributing around 13 percent to overall warehousing demand however recorded a tremendous growth rate of 20 percent in FY-2020. The fastest-growing E-commerce market has undoubtedly increased the demand for warehousing in various cities. Moreover, the e-commerce market, which has witnessed strong growth in the last few years, is estimated to be at 70 billion dollars in 2019 and is forecasted to reach over 160 billion dollars by 2022 with strong investment opportunities in tier II & III cities.