H&M looks to set up its first warehousing hub in Bhiwandi

source: SnS124.com / 27-January-2017

Hennes & Mauritz (H&M) is in advanced discussions with Mumbai-based Prakhhyat Infraprojects, which operates the 150-acre K. Square Industrial Park at Bhiwandi

 At present, H&M operates a warehouse in Delhi through third-party logistics firm Geodis. 

Mumbai: Swedish clothing retail firm Hennes & Mauritz (H&M) is close to leasing around 2.75 lakh square feet of space at Bhiwandi in Maharashtra to set up its first warehousing hub in India that would be directly operated by the company, according to two people aware of the development who spoke on condition of anonymity.

The company, which entered India in 2015, is in advanced discussions with Mumbai-based Prakhhyat Infraprojects Pvt. Ltd, which operates the 150-acre K. Square Industrial Park at Bhiwandi, said one of the persons cited above.

The monthly rental has been pegged at Rs29 per sq. ft with a five-year lock-in period and the option to renew the lease for another five years, the person added.

The upcoming warehouse at Bhiwandi would be a built-to-suit facility and is expected to start operations next year, the second person cited above said.

According to property consultants, the rental is on the higher side as it comes with a premium since the warehouse would be developed as per the requirements of the company which is leasing it. The normal monthly rent particularly around Bhiwandi stands at around Rs10-15 per sq ft.

Other big companies which have warehouses in the vicinity include e-commerce firms Flipkart, Amazon and logistics firm DHL Express. “H&M has been wanting to come up with a better warehouse of its own,” the person said.

At present, the company operates a warehouse in Delhi through third-party logistics firm Geodis.

A spokesperson with H&M declined to comment on the development while Prakhhyat Infraprojects did not respond to emailed queries .

The deal is part of the larger trend where most manufacturing firms and retailers are already on the look-out for bigger warehousing spaces in the country given that good and services tax (GST) is expected to be rolled out soon. The demand is only likely to grow after GST as a unified tax structure makes bigger warehouses economically viable, said consultants.

Present across 62 countries, H&M is the world’s second largest apparel retail chain after Spanish clothing company Inditex, the parent firm of Zara.

“H&M has been aggressively looking for a lot of retail spaces across all regions of India. Considering that all the floor sizes are large , they would sure have big warehousing requirements as well. The overall warehousing requirement from retailers is high and most firms are aggressively looking at certain belts in India because of the upcoming goods and services tax (GST),” said Aditya Sachdeva, director (retail) at Knight Frank, a property consultant.

As per Knight Frank estimates, the total requirement of warehousing space in the country’s top seven markets is expected to grow from 621 million sq. ft in 2016 to 839 million sq. ft by 2020.

At present, the demand for warehouses is driven by the manufacturing sector, followed by brick and mortar retailers and e-commerce firms.