ESR India, an industrial and logistics real estate platform, is looking to step up land acquisitions to expand its portfolio, as well as build in-city distribution centres, prompted by high demand by e-commerce and retail companies, said a top company executive.
In the last three months, ESR has closed two land acquisitions, in Gujarat and Chennai. In India, it is currently present in nine cities with 16 operational sites and a total gross floor area (GFA) of about 18 million sq ft.
“Many land acquisitions are in the pipeline, given that there are not many Grade A portfolios to buy.
Our focus is Tier 1 and some Tier 2 cities. As an effect of the pandemic, e-commerce did very well, but demand for industrial space slowed down. However, there has been a sharp jump in deal closure and demand for industrial side of the business in recent months. Third party logistics (3PL) providers are also coming back. Overall business is back in a much stronger way, and both demand and leasing momentum are high now,” Abhijit Malkani, country heads, ESR India said in an interview.
ESR is also planning to add the much in demand in-city distribution centres as a new asset class within its business. Urban logistics is growing significantly to cater to the last-mile delivery network, particularly by of online commerce firms.
“Globally, we specialize in in-city logistics. In India, we did a lot of research, and it’s our big focus area. It is also the need of the hour. Even for in-city, we will buy 5-15 acres of land and develop greenfield projects. Some may be brownfield developments, where we demolish and build the assets,” Malkani added.
ESR’s in-city plan would be largely led by demand from e-commerce, retail, 3PL and cold storage firms, who need deliveries in 1-2 hours to customers and retailers. It will initially look at the top 4-5 metros, with Mumbai and National Capital Region (NCR) as the top two preferred locations, followed by Bengaluru.
After not being too aggressive in investments in the last two years, over the coming year, ESR is looking at fast growth and expansion, including acquiring and developing 30–150-acre warehousing facilities, and a couple of in-city distribution centres.
“We are very bullish, given the exponential rise in both e-commerce and manufacturing businesses,” Malkani added.
During the January-September period, industrial and warehousing assets attracted investments of about $900 million from investors, property advisory Colliers said. Leasing in warehouses has seen continued momentum as e-commerce firms such as Amazon India and Flipkart have been taking up space as they expand to meet customer demand.
Source: Mint