With the Indian E-commerce market reaching nearly $20 billion in 2015, one of the many challenges facing this industry is space crunch. Any lay man would think this as impossible considering that the e-commerce industry is completely based on online buying and selling, and retail property should form a miniscule of the cost for the company. However, with the Indian user going online to buy every single item – be it grocery, washing machine or even furniture; the warehouse requirements of these companies are increasing at an unbelievable pace.
E-commerce companies accounted for 40% of the 1.7 million square feet of warehouses leased in 2014, which was a seven-fold increase from 2013. This has also resulted in the warehouse rents to increase by a quarter over the last year.Other than warehouse requirements, as these e-commerce companies expand and recruit more people, the need for commercial office space is also increasing drastically. Some estimates indicate that office rents in Bengaluru, where a lot of e-commerce companies are based out of, could rise by as much as a fifth in the next few months as property requirements add to demand.
E-commerce companies comprised less than 5% of the 30 million sq. ft of offices leased in 2014, but it has already started increasing in the past couple of months and is expected to drive demand over the next three to six years.
Only time will tell how much influence the upcoming e-commerce industry will have on the real estate industry in India, which is also one of the biggest markets in the country.