Person 1 - Amit - Congratulations on the fantastic views of the Webinar.
Hey Amit, you keep advising that the Industrial sheds and warehousing are the best asset class and there is a phenomenal demand for the same - But when I drive around Chennai, I find that so many sheds are vacant and not leased. can you give your opinion on the reasons Why are so many sheds vacant?
Amit - Wrong Location, Wrong Location, Wrong Location:
It might seem the same but there are 3 different aspects to look at again:
- The land should be under a master planned area so that this becomes part of a larger city and gets the necessary attention in all aspects required for the development. This is very important to ensure continuous growth in the areas not just in the specific location but also adjoining the area.
- The Specified land should have the potential to become a residential hub or meet the needs of the residential sector in the next 20 years which means that though the area should be very close to an industrial area shouldn’t be part of a government estate to permit conversion later.
- Basic Infrastructure should be available today - how would you do it? SIMPLE One should physically measure the tarred portion of the road !!?
- It should be 30 feet wide and highways should be in close vicinity with well-connected public transport nearby.
- Most of the sheds are built as per knowledge - Owners do not pay attention to the needs of the market and build whatever they know or what they have seen and heard about which might be Cost effective in the short run but can end up being nonprofit making in the long run. Though “Cost saving “ should be taken into consideration but cannot be the decisive factor to zero down the Specifications.
- Most owners have limited understanding of who is the end occupant or their requirements. The reason why this is important is that every micro market is suitable for a different tenant type. Every tenant requires different compliances to be followed which further leads to varied requirements of the prevailing type of development.
- The One Size does not fit all concept is applicable here as well - Appropriate sizing is an important element that needs to be studied so that we can minimize the risks involved in the whole project. It is important not to build very big sheds which might end up being vacant and at the same time not to settle down with smaller sizes as it has a direct consequence on the quality of tenants that one might get.
- The Shed owners are unclear about the specifications that are required. The Modern setups are very product specific. A grade A specification shed requires more height, wider apron areas, more number of shutters, fire safety protocols, etc. These specifications need to be carefully studied and followed so as to be able to cater to the demands of the tenant.
-Since ROI is the main focus and investors tend to work on a budget - saving money spoils the ability to rent while overspending spoils ROI
The above precisely is the reason that sheds are vacant in such a buoyant market.
Do you want to rent/buy/sell a warehouse Visit our site
