Building for Tomorrow: How BTS Warehousing Is Meeting Today’s Business Demands

Through the Lens of Time:

The evolution of warehousing in India from godowns to world class, sustainable structures has been remarkable. This article explores the benefits of custom-built facilities compared to standard warehouses.

With the demand for logistics and warehousing space in India expected to reach 380 million sq. ft by the end of 2024 and an estimated growth rate of 8-10% annually ¹, developers are turning to flexible warehousing solutions to meet customer demands. Built-to-Suit (BTS) warehouses are customised and scalable facilities designed to meet specific business needs, and leaders like Horizon Industrial Parks are helping companies create them.

The history of BTS Warehousing in India is less than a decade old, but its drivers are the same as any technological revolution: demand and technology. As per a JLL² report, India Industrial Services, 2022, we witnessed an 8% growth with the leasing activity touching 31.6 million sq. ft. This uptick is despite the fact that e-commerce is holding less inventory post-Covid-19. India had a 21% year-on-year increase in Grade A and B warehouse space in the top eight cities in 2021, with the total stock reaching 287 million square feet at the end of 2021, which has since expanded to 307 million square feet in H1 2022. The Grade A vacancy rate in India has declined dramatically to 7.7% in H1 2022, increasing the rent index from 126 in 2021 to 129 in H1 2022, owing to rising demand for superior storage space.

In 2021, according to a Knight Frank, India Warehousing Market Report – 2022, around 28% of total absorption contracted was under the BTS model.

The Current Catalysts:

The rising demand for build-to-suit warehouses can be attributed to several factors that have made it an indispensable part of the supply chain ecosystem.

Firstly, there is a growing emphasis on sustainability in the construction industry, and BTS warehousing is no exception. Tenants are increasingly seeking solutions that include amenities such as green energy, zero discharge facilities, water conservation measures, rainwater harvesting, and so on. As sustainability and sustainable development take centre stage, built-to-suit warehouses can be tailor-made to contribute to every business’ carbon reduction goals. With features such as energy-efficient lighting, HVAC systems, and solar panels, BTS warehousing can significantly reduce the carbon footprint of businesses and make their operations more sustainable.

Secondly, the expansion of multinational corporations in emerging economies like India has fueled the demand for high-spec, BTS warehouses. BTS warehouses offer a unique solution that is tailored to the specific needs of businesses, providing a high degree of customization in terms of design, layout, and automation, for maximum efficiency.

Lastly, the Production Linked Incentive (PLI) and Make in India schemes will have significant impact on the manufacturing industry and their supply chains. The PLI scheme offers incentives for increased domestic production, leading to expanded manufacturing, technology adoption, and employment opportunities. It reduces import dependence, strengthens the supply chain, and enhances self-reliance. The Make in India initiative attracts investments in manufacturing, creating a robust ecosystem. Together, these schemes aim to promote local manufacturing, reduce imports, create jobs, and enhance industrial competitiveness, positively impacting the Indian supply chain.

PLI will also, increase the production of ancillary units and strengthen the overall manufacturing ecosystem. The impact of various schemes and the uses of BTS Warehousing for different sectors is explored in Article 2

The Edge of BTS Warehousing:

As per a recent report by Mordor Intelligence, the BTS warehousing market in India is anticipated to grow at a CAGR of 16.4% 3 during the forecast period of 2021-2026. Here are some of the key benefits that BTS warehousing offers to businesses:

Flexibility and Tailored Solutions:

With BTS warehousing, businesses can enjoy the benefits of custom-designed warehouse spaces that offer the flexibility and agility to adapt to changing market dynamics and customer needs. Businesses can choose the size, layout, height, and number of dock doors to create a tailored warehouse space that aligns with their specific requirements.

Maximised Space Utilisation:

BTS warehousing allows for optimal utilization of available space, thereby minimizing costs. By custom-designing layouts with features such as additional dock doors and high ceilings, BTS warehouses eliminate underutilized spaces commonly found in traditional warehouses. According to a trends-and-insights publication by JLL⁽³⁾ dated 10th March 2023, the demand for BTS warehouses is driven by the need for efficient space utilization, particularly in urban areas where land availability is limited.

Improved Cost Savings:

One of BTS warehousing’s most important advantages is its capacity to increase savings. Businesses can increase overall cost savings by lowering transportation, storage, and logistics costs with a custom-designed warehouse.⁴

Improved Working Conditions:

BTS warehousing creates a productive working environment for employees by offering tailored warehouse spaces with features like climate control, ergonomic designs, and advanced lighting systems. HVLS fans, forced ventilation systems, thermal insulation for roofs and walls, and other technologies are being used to improve the thermal comfort and indoor air quality inside these warehouses.

Streamlined Supply Chain Operations:

BTS warehousing helps streamline supply chain operations by improving the flow of goods and reducing the time taken to move products from one point to another. A customized warehouse layout can be designed to accommodate specific types of inventory, optimized to minimize the distance and time required to move products from the warehouse to the loading dock. According to a report by Frost & Sullivan ⁵, the use of advanced technologies such as automation, robotics, and artificial intelligence in BTS warehousing can further enhance supply chain efficiencies.

New Horizons for You

With our portfolio of around 1000+ acres and 17+ parks across multiple cities, we are well-equipped to provide bespoke industrial real estate and warehousing solutions for your business needs. As your strategic partner, we can assist you in choosing the perfect location and provide design inputs to create a Grade A warehouse that aligns with your business objectives. Our integrated approach to land acquisition, compliance, asset development, and property management optimizes efficiency and controls costs to deliver maximum value to your business.

We have co-created custom warehouses and industrial spaces for customers from diverse sectors including light manufacturing, e-commerce, cold chain, auto and chemicals. We can collaborate with you to build your custom warehouse space to support you in adapting to evolving market conditions, with agility, enabling you to reduce operating costs while improving sustainability.

Citations:

1. https://www.moneycontrol.com/news/business/real-estate/warehouse-inventory-likely-to-shoot-past-380-million-sq-ft-by-2024-jll-study-7772301.html
2. https://www.jll.co.in/content/dam/jll-com/documents/pdf/research/india/india-real-estate-outlook-2021-jll.pdf
3. https://www.mordorintelligence.com/industry-reports/india-built-to-suit-warehousing-market
4. https://www.jll.co.in/en/trends-and-insights/investor/why-knocking-down-warehouses-is-on-the-rise
5. https://ww2.frost.com/news/press-releases/rise-automation-and-artificial-intelligence-key-growth-opportunities-warehouse-automation-market