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 March 13, 2010 - 2:54 PM EST
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Pune emerging warehousing hub

Pune emerging warehousing hub

Alka Kshirsagar

Road and rail connectivity, availability of skilled labour and the relatively affordable cost of production were amongst the factors that contributed to Pune's emergence as a major hub for the engineering and auto industries.

It is these strengths and the proximity to major ports and the golden quadrilateral that are now propelling its development as a warehousing hub. Rising investment

Investments into warehousing projects are on the increase as the demand for modern warehouse space increases, pushing rental costs. A report by real-estate consulting firm Jones Lang LaSalle (NYSE:JLL) Meghraj (JLLM) on the transforming landscape of Indian warehousing that covers nearly 40 cities, lists Pune as one of seven primary hubs in the country. The other six are the four metros, and Bangalore and Hyderabad.

Typically the city had warehouses in three main areas; those at Wagholi catered to the needs of the industrial units at Ranjangaon and on Ahmednagar Road. Phursungi took care of the requirements of units on Solapur Road, while the Tathwade belt serviced units that had developed along the Mumbai-Pune highway.

With Chakan emerging as an important industrial location, the new action is now all here and in nearby Talegaon, with Hinjewadi also picking up. While earlier the clients were largely white goods manufacturers and the engineering industry, with large players such as Volkswagen, Tata Motors, Mercedes Benz, General Motors in the vicinity, the auto industry is now a major customer. Adding to the appeal is the fact that this area lies outside city limits and does not attract octroi. Within city limits, octroi reduces the cost competitiveness, and is a major deterrent for the warehousing industry, observes Mr Praful Talera, head of Dynamic Logistics. His company owns a warehousing complex at Dighi, which provides a range of logistics services.

Changing scene

The growing demand for warehousing space, combined with the general land crunch, has naturally led to rentals escalating. “The scenario has changed dramatically over the last few years,” says Mr Rohit Hegde, Director, KSH Distriparks Pvt Ltd. Rents that stood around Rs 4-8 per sq.ft have climbed steadily, with the steepest rise being witnessed in the areas that serve requirements of industry nearest to Mumbai.

Today, according to him, rents at Talegaon are in the Rs 14-22 per sq.ft, typically with a five-year term and a six-month lock-in period.

KSH Distriparks, which already has an International Container Depot on 16 acres of land at Talegaon, is adding another 12 acres in the vicinity. The company recently acquired government sanction to store CBU cars under duty at its warehouses. It is one of five centres in India where such a facility is available, the others being Kochi, Chennai, JNPT and Tughlaqabad.

In keeping with what is now an emerging trend, warehouses are part of a bigger complex, a logistics park, so to say. KSH is also moving in this direction and trying to develop a logistics park at Chakan where warehouses and a truck terminus amongst other facilities are being built on 25 acres.

With an area of 1.5 lakh sq.ft under warehouses presently, it plans to take this to a million sq.ft in the next three years with an investment of Rs 110 crore, says Hegde.

Rentals at the other warehouse hubs around the city too have risen in the last few years, but not as dramatically. At Wagholi the rental rates are Rs 8-10 per sq.ft, with the major buyers of space being the white goods and home appliance manufacturers. The situation is similar at Phursungi, the only difference being that the major client here is the paints industry.

Source: Hindu Business Line (March 13, 2010 - 2:54 PM EST)