The industrial and warehousing sector is going through a transformation. From a defragmented and unorganised structure a few years ago, it is becoming formal and organised, with interest from national and global developers and funds. With a clear agenda to supply requirements of Grade A industrial and logistics parks across the country, as stage 1, Embassy Industrial Parks is setting up eight to 10 parks in eight cities, including Mumbai, Delhi, Hosur, Bengaluru, Pune, Chennai, Hyderabad and Ahmedabad. The company recently acquired 60 acre in Hosur between Chennai and Bengaluru to build a 1.3 million industrial and logistic park at a cost of Rs 2.80 billion. Further, there will be more than one park in high consumption markets like Delhi and Mumbai. Over the next three years, the company will build up to 35 million sq ft of leasable area. “We plan to buy land with our committed equity line of $250 million,” informs Anshul Singhal, CEO, Embassy Industrial Parks. Currently, the company has operational sites in Bilaspur, Gurugram and Chakan, Pune; Farrukhnagar, Sriperumbudur, Hosur and Hyderabad are next in line. IndoSpace plans to build logistics parks across newer geographies such as Ahmedabad, Coimbatore, Sri City (Andhra Pradesh), etc, while expanding in existing markets. Recently, the company entered Gujarat with a Rs 6.50 billion investment. With around 30 million sq ft across developed and under-construction projects, its portfolio includes 30 industrial and logistics parks in nine cities. Mahindra Lifespace Developers has pioneered successful integrated cities under the Mahindra World City (MWC) brand.  The two MWCs in Chennai and Jaipur have been developed on the ethos of ‘livelihood, living and life’. “The company’s new brand of industrial clusters, ORIGINS, was launched to address the growing need for sustainable industrial infrastructure,” says Sanjay Srivastava, Business Head, Mahindra World City, Jaipur & Director, ORIGINS, Ahmedabad. Its first project is in North Chennai with a Phase 1 development of 264 acre, a JV between MWC Developers and Sumitomo Corporation of Japan. The second project is near Ahmedabad, with a Phase 1 development of 268 acre, and is being developed along with International Finance Corporation as a strategic partner. For Hiranandani Group, the industrial, logistics and warehousing sector is a natural transition given its proven history in real estate, infrastructure, and the mixed-used integrated township development model. The company’s newly established vertical ‘GreenBase’ will provide logistics and industrial parks that are more customer-centric and build optimisation and efficiency for the end-user. Business model So, what business approach are developers adopting? Embassy Industrial Parks has adopted the business model of buy, build and lease. “We will invest capital on land and building and charge a rent,” says Singhal. “This is where a corporate can mandate us to build their solution for real-estate needs.” He adds that the general market yield expectation is 10-12 per cent for development projects. IndoSpace leverages its large land bank and pan-India presence to develop parks in industrial and urban hubs. “The ‘build-to-suit’ service offers turnkey solutions, including land acquisition, construction and management of dedicated distribution facilities,” says Rajesh Jaggi, Managing Partner, Real Estate, Everstone Group. “Our approach is focused on creating world-class, plug-n-play infrastructure supported by an enabling ecosystem and skill development support for Mahindra World Cities and ORIGINs,” says Srivastava. “We offer long-term land lease options for a majority of industrial clients to help them build and own their assets for the future. We also work with our enabling partners to offer an alternative for clients looking at industrial or warehousing built to suit (BTS) via rental or op-ex business models.” For Hiranandani Group, the operating model of GreenBase shall include BTS industrial facilities, cold storage, and BTS warehouses for end customers and large 3PL players. As Dr Niranjan Hiranandani, Founder & Managing Director, Hiranandani Group, shares, “For the businesses that opt for plug-n-play and need warehousing solutions, GreenBase will offer land acquisition, master planning, optimising design, BTS and a project management consultant.” He adds that Pune (Talegaon), Nashik, Mumbai (Panvel), Chennai (Oragadam) and Kolkatta (Durgapur) are where it all begins. The company’s focus is on providing integrated townships where warehouses or industrial units will be supported by social infrastructure amenities. “We expect to develop 10 million sq ft warehouse areas pan-India in the next seven to eight years,” he says. Acquiring land The cost of land is a vital component in project sustainability, contributing almost 25-35 per cent of the total project cost for an industrial or logistics park. In the case of a warehousing project, N Srinivas, Managing Director - Industrial Services, JLL India, adds, the investment decision is typically inversely co-related with additional distance covered and cost of land. He also highlights that from the user perspective, key decision-making queries relate to the project site being located before toll gate, location of nearest transportation hub, width of the road, and whether there is a suitable turning radius for trailers.These clearly indicate the market perception on incremental cost of transportation and operational ease. Hence, the right location of a land parcel, with all the requisite attributes, is of primary importance. However, acquiring land is probably the biggest challenge faced by developers, as Srinivas affirms. Unfortunately, in some locations or states, it comes under the purview of local laws pertaining to land ceiling acts, etc. Private developers who follow the model of leasing built spaces are predominantly exploring land parcels between 25 acre and 250 acre depending on the location. Besides, large tracts of land are either acquired from private owners or in a JV with state authorities. “In some cases,” adds Srinivas, “fund managers who are looking for a quick entry in the market are also exploring JVs with developers who have historically acquired land parcels or even small industrial or logistics players.”-SHRIYAL SETHUMADHAVAN