A majority of the preference in operating assets is in leased ready-built properties for tenants searching for medium to long-term occupancy. “With the evolving market, negotiation in terms of contract, where the developer is willing to comply with predefined specifications for development for their occupiers, is increasingly growing,” observes Chandranath Dey, Senior Director and Head - Industrial Consulting and Supply Chain Consulting, JLL India. This is resulting in build-to-suit developments that have become a lucrative and financially sustainable operating model for developers supported by assured occupancy for the long term. “Meanwhile, certain developers are also evaluating plot sale options targeted at industrial or light manufacturing players, considering their specific need of building development,” he adds. Embassy Group follows the buy, build and lease business model. “Basic support like electrical infrastructure, fire-fighting systems, ramps and dock levellers are some of our provisions,” says Aditya Virwani, COO, Embassy Group. “We pass on the responsibility of internal handling and operations onto tenants.” Clients prefer the leased model instead of a capex model, observes Dr Niranjan Hiranandani, Chairman & Managing Director, Hiranandani Communities & GreenBase. “This frees a lot of funds that they can, in turn, channel to upgrade the supply chain and systems. Also, they get ready to move into the facility and do not have to worry about approvals and the construction cycle.” Key takeaways for warehouse developers Standardise warehouse development aspects Invest in large contiguous tracts of land Offer flexible pricing arrangements Warehouse facilities management Source: Knight Frank Research Equity IRR for development projects across warehousing clusters City Warehousing cluster Quoted land rate (Rs mn/acre) Quoted rentals (Rs/sq ft/month) Equity IRR achievable for a development project Ahmedabad Changodar-Bagodara 4-35 10-18 18% Aslali-Kheda 6-32 10-20 16% Bengaluru Hoskote-Narsapura 7-15 12-16 18% Nelamangala-Dabaspete 10-23 10-16 12% Chennai Sriperumbudur-Oragadam cluster 10-40 15-28 22% NH 5 - Periyapalayam cluster 8-150 14-24 22% Hyderabad Jeedimetla - Medchal 15-50 10-18 12% Mumbai Bhiwandi 12-50 11-20 20% Panvel 25-50 17-25 16% NCR NH – 48 Cluster 10-25 12-22 26% Ghaziabad Cluster 10-40 14-22 26% Pune Chakan- Talegaon 10-30 16-28 28% Wagholi-Ranjangaon 10-35 12-22 22% Source: Knight Frank Research SERAPHINA D’SOUZA