Surge in demand for warehouses by e-commerce companies increases rental cost


As compared to pre-COVID levels, lease rentals northwards have been increased by 20 per cent to 30 per cent between June and September, 2020 due to increase in demand for storage from the Indian e-commerce companies.

The increase in demand for warehouses closer to the city is seen after e-tailers entered into sale of perishables and groceries during the lockdown.

Vivek Tiwari, Chief Operating Officer (COO), Godamwale Trading & Logistics, said in a statement, “We have seen an average price rise on rentals between 20 per cent to 30 per cent metro cities in Hyderabad, Bengaluru and Chennai, and a 10per cent to 15 per cent increase in Delhi NCR and Mumbai. This is primarily driven by a spike in demand by 20 per cent in bookings under the consumer segment business driven by e-commerce companies, unlike the industrial segment comprising manufacturing companies which has seen a negative growth.”

In Chennai, the rental cost of storage space has increased from Rs 20 per sq feet to Rs 25, from Rs 12-Rs 13 to Rs 15 in Bengaluru and Hyderabad and from Rs 13-Rs 15 to Rs 17-Rs 18 per sq feet in Delhi NCR and Mumbai, says report.
Vinoth Raja, Chief Executive Officer (CEO), Stockarea also said in a report, “Rental cost has gone up by 10 per cent to 15 per cent as there is a supply demand gap in the last three months, especially after demand for warehouse space located in the outskirts of cities shot up by 30 per cent. This is primarily due to e-commerce platforms’ entry into home delivery of essential items — especially perishables.”

“Rental prices are negotiable based on the volume and tenure of storage. Higher the volume and longer the commitment, warehouse space can be availed at cheaper rates. At present, lease rental cost now ranges between Rs 15 and Rs 25 per square feet, which has seen a 10 per cent-15 per cent spike since the lockdown is lifted,” added Raja.


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