Interview: Abhijit Malkani, Chief Executive Officer, ESR India

Labour constraints are increasingly shaping the operational dynamics of large-format warehousing, particularly as throughput expectations continue to rise. Technology is addressing this through both substitution and augmentation

The warehousing sector in India has witnessed significant expansion in recent years. How do you assess the current growth momentum, and what are the key factors driving this surge in demand?
What we are witnessing is a structural repricing of the Indian warehousing sector – from a fragmented, cost-driven function to an institutionalised, yield-bearing asset class. Grade A stock has scaled meaningfully, now exceeding ~350 million sq ft across key markets, with sustained absorption levels of 30–35 million sq ft annually. However, the more important shift is qualitative. Demand is no longer opportunistic; it is programmatic and long-cycle in nature. We see this being underwritten by three converging vectors. First, post-GST supply chain rationalisation is driving consolidation into fewer, larger, and more efficient nodes. Second, the continued formalisation of e-commerce and 3PL is demanding precision-led infrastructure capable of supporting high-throughput operations. Third, and increasingly decisive, is the reindustrialisation thesis playing out in India, with manufacturing-led demand beginning to anchor long-term absorption. The consequence of this is a clear bifurcation in the market. Institutional-grade assets are commanding disproportionate demand, while non-compliant stock is rapidly becoming obsolete. Given that Grade A penetration still remains sub-40%, the runway for formalisation – and therefore growth – remains significant.

Site selection plays a crucial role in the success of logistics parks. What are the key parameters you consider when identifying strategic locations for warehouse development?
For us, site selection is less about opportunistic land acquisition and more about constructing long-duration relevance within evolving logistics networks. We begin with a granular analysis of freight flows, consumption density, and industrial clustering, and then overlay infrastructure visibility. Connectivity to arterial road networks, expressways, and multimodal nodes is a baseline requirement, but what we are fundamentally assessing is whether a location can sustain logistical relevance over a 10–15 year horizon. Equally critical is labour depth. As facilities scale beyond half a million square feet, workforce availability becomes a binding constraint, not a variable. Locations that cannot support labour scalability are inherently capped in their utility. We also prioritise land parcels that allow for institutional-scale development. The ability to create integrated parks, where tenants can expand within the same ecosystem, is central to our strategy. It enhances tenant stickiness, reduces churn, and improves lifecycle asset performance. In essence, our approach is to underwrite locations not for immediate absorption, but for durable demand adjacency.

How have major infrastructure initiatives influenced warehousing growth and how are you aligning your strategy?
Infrastructure is compressing both time and distance within India’s supply chain architecture, and that has profound implications for warehousing strategy. With freight corridors and expressways materially reducing transit times, we are seeing a recalibration of network design – from distributed, city-centric models to more consolidated, corridor-led configurations. This is not merely a shift in location preference; it is a redefinition of logistics efficiency. Inventory pooling, faster turnaround times, and reduced transportation costs are enabling occupiers to rethink their entire distribution footprint. Our capital deployment is closely aligned with these infrastructure-led demand corridors. We are building along nodes where connectivity is either operational or de-risked through committed infrastructure pipelines. This allows us to position assets ahead of demand while maintaining underwriting discipline. The strategic advantage lies in anticipating where logistics gravity will shift – not where it currently resides.

We are witnessing a growing preference among occupiers for built-to-suit warehouses. What factors are driving this shift, and how is your company responding?
The migration towards built-to-suit is a natural consequence of increasing supply chain complexity and capital intensity at the tenant level. Large occupiers are making significant investments in automation, process optimisation, and inventory management systems. These investments necessitate infrastructure that is purpose-built rather than retrofitted. Standardised warehousing simply cannot support these operational requirements. At ESR, built-to-suit is not treated as a bespoke offering – it is embedded within our operating model. We engage with tenants at a strategic level, often aligning with their medium-term capacity planning, and deliver infrastructure that is calibrated to their operational specifications. This has two important outcomes. First, it enhances operational efficiency for the tenant. Second, it materially improves asset quality from an investor standpoint, given that built-to-suit facilities are typically backed by longer tenures and stronger covenants. In that sense, built-to-suit is not just a leasing format – it is a mechanism for deepening capital-aligned tenant relationships.

With manpower availability emerging as a key challenge, what role is technology playing in driving growth and improving operational efficiency?
Labour constraints are increasingly shaping the operational dynamics of large-format warehousing, particularly as throughput expectations continue to rise. Technology is addressing this through both substitution and augmentation. Automation and robotics are reducing dependence on manual processes, while systems such as WMS are enabling real-time visibility and control across inventory and operations. We are also embedding intelligence at the asset level through IoT-enabled monitoring and predictive maintenance frameworks. This allows us to optimise asset performance, reduce downtime, and extend lifecycle efficiency. Energy optimisation is another area where technology is delivering measurable outcomes. Data-led energy management systems enable us to rationalise consumption patterns, which directly impacts operating costs. The broader shift is towards algorithm-driven logistics environments, where decision-making is increasingly data-led and efficiency gains are systematically captured.

With sustainability becoming a key priority, how are ESG considerations influencing your developments?
ESG has transitioned from a compliance overlay to a core determinant of asset competitiveness and capital access. At ESR, sustainability is embedded at both the design and operational levels. This includes renewable energy integration, resource-efficient building design, and continuous environmental monitoring. Our solar expansion strategy is a reflection of how we are scaling sustainability across the portfolio in a measurable way. What is important is the economic alignment. ESG-led design reduces operating costs, improves tenant experience, and enhances asset longevity. These factors translate into stronger occupancy, longer tenures, and more stable income streams. From a capital markets perspective, ESG compliance also broadens the investor universe and can materially influence cost of capital. So, the lens through which we view ESG is very clear—it is not just responsible, it is economically accretive.

Which sectors are currently driving the strongest demand, and how do their requirements differ?
Demand in the sector is becoming increasingly stratified across use cases. E-commerce and 3PL continue to drive scale-led demand, with a focus on throughput efficiency and proximity to consumption centres. Manufacturing, on the other hand, is driving specification-led demand, with a preference for customised, long-tenure facilities integrated into production ecosystems. FMCG demand remains steady, driven by network optimisation and distribution efficiency. We are also seeing a geographic broadening of demand, with Tier 2 and Tier 3 markets gaining traction. This reflects both infrastructure improvements and cost arbitrage, and is leading to a more distributed logistics architecture. The key insight here is that demand is no longer monolithic—it is segmented, specialised, and increasingly strategic.

How have initiatives such as the National Logistics Policy and PM Gati Shakti influenced the sector?
These initiatives represent a shift towards coordinated infrastructure planning, which has historically been a gap in India’s logistics ecosystem. The objective of reducing logistics costs from the current 13–14% of GDP closer to global benchmarks is ambitious, but directionally critical. For warehousing, this translates into better network integration and more efficient location planning. The visibility provided by these frameworks allows us to align our development pipeline with emerging infrastructure nodes. This reduces location risk and improves long-term asset relevance. The opportunity now lies in execution – particularly in ensuring that policy intent translates into on-ground efficiency gains.

Looking ahead, how do you see the sector evolving, and what role do you envision your company playing?
Over the next decade, the Indian warehousing sector will consolidate into a more institutional, technology-led, and sustainability-driven asset class.  We expect continued growth in Grade A supply, but more importantly, a sharper divergence between compliant and non-compliant assets. The former will attract capital and tenants; the latter will gradually be phased out. Our focus is on positioning ourselves at the centre of this transition. This means building assets that are not just relevant today, but resilient over time – aligned with both tenant requirements and investor expectations. We see our role as constructing a platform that integrates scale, operational excellence, and capital discipline. Ultimately, the objective is to create assets that are not only functional, but institutionally investible at a global level.