CHENNAI: Logistics and warehousing space developer TVS Industrial and Logistics Park (ILP) Private Limited, part of TVS Mobility Group, plans expansion into 10 more cities on the back of strong demand driven by fast moving consumer goods and consumer durable (FMCG & FMCD) sector.
The company wants to double its current portfolio of 10 million sq.ft to 20 million sq.ft in the next three- four years. It has purchased land and started construction in Vizag, Sricity, Patna, Jammu, Siliguri, Gauhati, Hubli, Jaipur, and Cuttack. The company plans expansion into 35 cities by 2027-28, all tier-II and tier-III cities. With a significant presence in south, it plans expansion in north and north-east markets.
There is a lot of interest in Grade A projects in non metro cities, said Manikandan Ramachandran, COO of the company. Except for eight major cities, there is no grade A space availability, this has changed, clients want to move out of non-compliant godowns post-pandemic, he said.
The smaller cities become the hub for nearby towns and consumption centers and it brings down the logistics cost for the company. But higher land prices, lack of organised land aggregators, time-consuming compliances in some states pose challenges. It bets growth on Grade A warehousing space across industries in non-metro cities. FMCG and FMCD are more aggressive in moving to Grade A space, driving demand, he said. Manufacturing activity also contributes to demand.
While e-commerce used to be a major driver of warehousing demand, Manikandan said there is a general trend of slowdown of warehouse absorption from e-commerce players. “During festivals, despite demand they’re redesigning and utilizing capacity 150%,” he said, adding it may improve next year.