Kolkata’s emergence as a major national warehousing and warehousing destination over the past few years highlights a significant shift in the city’s and region’s real estate sector and puts it on a firm pedestal for future growth. Growth of the logistics industry has added a major tailwind to the city’s real estate, leading to diversification from the traditional office, residential and retail sectors with major implications for economic development and job creation. An enabling policy environment, locational advantages, superior connectivity have come together to drive multifold expansion of warehousing leasing activity from large firms amidst continued addition of premium, Grade A supply across key micromarkets.
Surging warehouse leasing activity highlights sector’s growth potential
The Covid-19 pandemic did have an adverse impact on the city’s warehousing and industrial sector with market uncertainty leading to muted leasing activities. Imposition of the lockdown and subsequent challenges surrounding labour and raw material availability adversely affected new supply as well. However, post pandemic recovery was rapid, leasing activities have reached record levels over the past couple of years as the city has solidified its position as a key logistics hub in east India.
In 2022, warehouse leasing volumes touched 3 msf, a record high, with over 2 msf leased subsequently in 2023. Leasing activity surged in 2024 to over 4 msf, scaling a new peak amidst sustained demand. Out of the cumulative total leasing volumes of 9.5 msf over the period 2022-2024, around 72% was concentrated in the NH19 micromarket with the remaining in the NH16 micromarket.
The Howrah-Hoogly belt, comprising the NH19 and NH16 micromarkets, has traditionally been a major industrial hub, especially at Dankuni and other locations around the NH19 highway. Dankuni has been a key warehousing hub as well and continues to attract major large occupiers for their warehousing requirements. On the other hand, locations such as Uluberia, Panchla, Sankrail, Amta-Ranihati Road along the NH16 highway are fast emerging warehousing locations accompanied by rapidly growing Grade A supply and rising land prices. In recent years, Old Delhi Road, an offshoot of the NH19 micromarket, has emerged as an attractive warehousing location with availability of premium warehousing developments, proximity to the NH19 highway and growing consumer base around the location.
Fast growing warehouse lease volumes also highlight the strong consumption recovery in Kolkata and the broader eastern region that has supported the logistics and warehousing industries. Third party logistics (3PL) companies have accounted for around 30% of warehouse lease volumes over 2022-2024 followed by a 21% share of e-commerce firms. Manufacturing and retail firms contributed 17% share of lease volumes each during this period. The warehousing industry has been a direct beneficiary of healthy consumer demand in sectors such as consumer durables, fashion and lifestyle accessories in recent years.
Sector benefits from multiple growth levers
Kolkata’s strategic location and the city’s status as the gateway to eastern/north-eastern India is a key factor driving expansion of the warehousing sector. Warehouses in the city help businesses gain easy access to a vast consumer market, which helps them in expanding their customer base but also tap into the growth potential of other locations in the region such as Bhubaneswar and Guwahati.
Kolkata’s strategic location near major ports and excellent connectivity to the broader eastern region helps in reducing transport costs and enables timely and cost-efficient distribution of goods. Supply chain efficiency is enhanced significantly through streamlining of distribution processes and ensures faster delivery to end customers.
Ample availability of land has also enhanced the attractiveness of NH16 submarket as a warehousing location. Developers continue to acquire sites for speculative developments as well as potential BTS facilities amidst healthy demand and tight vacancies in Grade A facilities. Refurbishing of lower grade warehouses is also a modus operandi that some developers/landlords are adopting to improve supply and cater to near-term demand. As a testament to the rising investor appetite for premium warehouse developments in Kolkata, Singapore’s Xander Group acquired Jalan Builder’s logistics park at Bagnan in the NH16 micromarket in 2021.
The West Bengal government has looked to provide an enabling policy environment to facilitate growth of the logistics and warehousing industry. The West Bengal Logistics Policy 2023 intends to grant ‘industry status’ to the logistics sector and develop multi-modal logistics parks. Dedicated land banks, simplification of regulations and clearances, improvement of cargo infrastructure, incentivizing technology adoption and skill development are other policy objectives. A planned West Bengal Logistics Center of Excellence aims to promote logistics startups, identify innovative transportation models and assess emerging digital solutions, among other things.
On the whole, Kolkata’s warehousing and logistics industry is buoyed by multiple growth drivers that will help it flourish over the next several years. And with this, the city’s real estate industry and broader economy is standing on the cusp of long term transformation.
