In the biggest single-land deal in the country while taking the warehouse space area into consideration, property consultant JLL India facilitated AllCargo Logistics, which is a part of Avvashya Group, in leasing about 3 million sq ft of warehousing space.
The deal will enable setting up of warehousing facilities in Delhi-NCR, Bengaluru and Hyderabad by Walmart-owned Flipkart- India’s largest e-commerce retailer and Decathlon- a multi-national sports goods retailer.
Reportedly, back in 2019, Allcargo Logistics agreed to lease 3 million sq ft space to Flipkart and Decathlon but the process took more than a year to materialise.
These two deals will help Allcargo to earn revenue of Rs. 120 crore annually and the company is also looking to invest this amount into constructing more warehouses in India. The estimated cost to be incurred for the construction of these warehouses will be around Rs. 1,000 crore. AllCargo will also be investing nearly Rs 450 crores to construct amenities for both Flipkart and Decathlon, who will have pay a yearly rent of Rs. 72 crores to Allcargo Logistics for availing these facilities.
In India, overall warehouse leasing has increased to 36.4 million sq ft in 2019 from 31.8 million sq ft during 2018.
Going forward, the absorption is expected to be strong in near to medium term primarily driven by Grade A spaces. The supply of Grade A warehouses have also increased to 22.5 million sq ft in the same period as against 18.6 million sq ft in the last year.
“The warehousing and logistics sector in the country continues to perform strongly. Riding on a maturity curve, the sector has been witnessing investments from developers and potential big occupier companies across sectors with a long-term view,” said Ramesh Nair, CEO & Country Head, JLL India, adding that the deal reflects the growing appetite of stakeholders looking at the sector with hope. “This said, there is a need to develop more and more quality warehousing facilities in the country.”