It’s destination Bhiwandi Hub for warehouse developers

It’s destination Bhiwandi Hub for warehouse developers

Mumbai: Forty kilometres from Mumbai lies Bhiwandi in Thane district, a warehousing hub dispatching hundreds of thousands of retail and industrial goods to consumers in the financial capital every day. The town, once known for its power looms, has emerged as a warehousing hotspot for e-commerce majors such as Amazon, Flipkart, Myntra and Pepperfry, attracting blue-chip investors and developers keen for a slice of its booming economy.

It’s destination Bhiwandi Hub for warehouse developers

According to property consultant JLL India, Bhiwandi has around 25.7 million sq. ft of warehousing space, of which only 3.2 million sq. ft are of Grade A quality. At this pace of growth, the town is closing in on Gurugram, which houses 25.98 million sq. ft of Grade A and B warehousing space.

Among firms actively looking to invest in the region are global commercial developers, including e-Shang Redwood (ESR), IndoSpace and Ascendas-Singbridge, and Bengaluru-based Embassy Group. Warburg Pincus-backed logistics developer ESR is all set to sign two large land deals in Bhiwandi, ESR India’s co-CEO Abhijit Malkani said. The company plans to build industrial parks focused on warehousing for retailers and e-commerce firms. If signed, ESR will become the first global institutional developer to enter the region.

According to Malkani, there is a massive demand-supply gap in the region due to lack of good quality space. “We are putting a lot of focus on Bhiwandi… Interest in the area has picked up in the past one-two years. Bhiwandi’s landscape will change with organized, institutional players coming in.”

Improved infrastructure and access to both Mumbai and Pune, as it is situated along the Mumbai-Nashik highway, have boosted Bhiwandi’s chances of becoming a major warehousing hub.

“Bhiwandi intersects Mumbai right through the middle. This is a location, where, if you have a distribution hub, you can reach both north and south Mumbai with equal ease,” said Chandranath Dey, senior vice president, head-industrial consulting, JLL India.

He added that the vacancy level at Bhiwandi’s warehouses is as low as 1-2%.

However, the region has its challenges, as it is dominated by unorganized developers. Besides, land acquisition has been difficult since much of the plots here are agricultural. “By law, one can have warehousing to the extent of 0.1 FSI (floor space index), which means just 10% of the total ground area. But in Bhiwandi, they are covering almost 70% of the ground floor,” said Dey.

However, a recent change in local laws, allowing developers to hold over 50 acres to get special approvals under the integrated industrial area policy, has attracted large global players. “Mumbai is a major consumption centre in India. There is no other location in Mumbai, which can service the scale of warehousing requirement like the way Bhiwandi can,” said Anshul Singhal, chief executive officer, Embassy Industrial Parks.

Amazon and Flipkart have been operating in the area for five-six years. While Amazon has five fulfilment centres in Bhiwandi, spread across 1 million sq. ft., Flipkart’s facility is around 3 million sq. ft.

With around 4,500 employees, Flipkart’s Bhiwandi facility is the largest in the western region.

“In the six years of operation, the facility has grown in line with the scaling of our business and the increased adoption of e-commerce in India,” said a Flipkart spokesperson.

For online furniture retailer Pepperfry, the 300,000 sq. ft warehouse in Bhiwandi is its largest distribution hub, with a capacity to accommodate around 80,000 boxes.

source: livemint