Due to several industry trends including the rise of multi-client warehouses, the popularity of 3PL and 4PL service providers, the need for customization/specialisation of storage facilities, as well as positive government support, Grade A warehouses are witnessing significant demand today.
These modern storage spaces with state-of-the-art technologies are compliant with industry standards of excellence, offering a smart and efficient storage solution. As per the latest reports, the 3PL sector accounts for 40% of total absorption in Q1 2023, the manufacturing sector for 23%, and 52% of both the total absorption and supply in Q1 2023.
Key benefits of Grade A warehouses
- Operational efficiency: Grade A warehousing comes with advanced infrastructural capabilities which provide enhanced management of traffic and cargo movement, supporting the easy implementation of cutting-edge MHEs that maximises productivity.
- Enhanced Security: Grade A warehouses come with compliant safety and security standards, including advanced surveillance and firefighting systems, tech enabled 24×7 monitoring and excellent SOPs and resources in place for crisis management.
- Scalable and Agile: Grade A warehouses are an apt choice to effortlessly accommodate the growing needs of the business. They are built to scale and are equipped with short- or long-term needs of scaling up or scaling down operations, with the option of customised agility.
Key Drivers for Rising Demand
- Proliferation of e-commerce: The paradigm shift in customer behaviour from offline to online shopping, more e-commerce players entering the industry, and larger warehouses that can store bigger inventories subsequently pushed the demand for Grade A warehouses. Due to the changing customer dynamics, e-commerce companies now need Grade A warehouses more than ever. Faster last-mile delivery focus by e-commerce firms has catapulted Grade A warehouses in the country.
- Rise of third-party logistics: 3PL firms are driving the demand for Grade A warehouses in Tier I and Tier II cities to facilitate intra-city last-mile deliveries and efficient storage for businesses, especially e-commerce and pharma sectors. When companies hire 3PL firms, they are looking for storage solutions matching international standards which has led to 3PL firms investing in Grade A warehouses to gain a competitive edge.
- Favorable government policies: Government initiatives like Make in India have pushed manufacturing activities in the country. The manufacturing sector needs advanced, sustainable warehouses built to suit specific industrial needs, which only Grade A warehouses can provide. They cater to the specific needs with material synchronisation and specialised equipment for material handling for efficient production processes.
- Demand for tech-enabled solutions: Post-pandemic, the demand for digital and contactless operations has risen. Grade A warehouses offer a platform for the implementation of cutting-edge technology that reduces human intervention. With the aid of sophisticated technology like Automatic Identification and Data Collection (AIDC), Automated Storage and Retrieval (ASRS), and QR codes, they enable smooth warehouse operations.
Emerging as an answer to businesses in the pursuit of modern storage solutions, with 30% additional open space, 30% space for internal cargo handling, and 40% storage height to enhance movement, Grade A warehouses handle high demand.