Authored by Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE
The increased proliferation of e-commerce has led several retailers to embrace an omnichannel retail strategy. The adoption of this strategy requires a complete overhaul of a retailer’s business, from advertising and merchandising to payment, fulfilment, and delivery. Seamless integration of offline and online channels necessitates the implementation of warehousing solutions which can manage diverse inventory types and accommodate various fulfilment methods. The logistical journey of a retailer involves three broad steps: the first mile, the middle mile, and the last mile. For retailers and e-commerce players, last-mile services are the key differentiators that ultimately ensure the overall success of the business and optimum customer satisfaction.
The New Real Estate Frontier: Intra-City Logistics
Traditionally, large warehouses were built on the outskirts of cities where land was cheaper, and zoning laws were more relaxed. However, these distant facilities can no longer keep up with the need for faster, same-day fulfilment.
A paradigm shift is underway, favouring urban proximity over purely cost-driven location decisions. This has catalyzed the emergence of intra-city logistics real estate—a network of smaller, agile, and strategically positioned facilities forming the very arteries of last-mile delivery. Nestled within a 10–15 km radius of major residential and commercial hubs, these city distribution centers are designed for speed and enhanced customer satisfaction, presenting a compelling opportunity for the real estate sector. Various technological breakthroughs continue to help retail businesses execute logistics operations with higher efficiencies, lower costs and greater flexibility based on seasonal demand. Innovations and futuristic technologies such as Artificial Intelligence (AI), Internet of Things (IoT), big data analytics, etc., help predict future purchases and facilitate operational improvements led by the collection and analysis of real-time data. This data is further used for warehouse management, inventory control and optimization in new-age warehouses.
Adding another layer of dynamism to this evolving landscape is the rapid ascent of micro-fulfillment centers (MFCs) and Dark Stores. These compact warehouse units, often cleverly integrated within existing retail spaces or underutilized commercial properties, leverage automation to expedite the delivery of online orders. By minimizing spatial footprints and slashing transportation costs, MFCs present a compelling proposition for both retailers seeking to enhance their omnichannel capabilities and logistics companies striving for efficiency. The concept of ‘Dark Stores’ have gained prominence as the retail landscape evolved immensely after the pandemic. Today, Dark Store is an integral part of the New-age Retail Supply Chain. Primarily, dark stores cater to quick commerce firms or big box retailers. Dark stores also help e-commerce players with their optimization strategies since these stores operate round the clock and use data analytics to plan delivery routes and maximize van capacity.As India’s urban centers expand and consumer preferences become increasingly nuanced, real estate developers are being compelled to embrace innovative solutions. The repurposing of underutilized assets—parking lots, ground-floor retail spaces, and aging commercial buildings—into micro-fulfillment centers is emerging as a pragmatic and effective strategy to meet the dual imperatives of faster delivery and enhanced accessibility. This adaptive reuse not only addresses the immediate logistical needs but also contributes to a more sustainable and efficient utilization of urban space.
Zoning and Policy
However, this integration of logistics into the urban fabric necessitates a crucial re-evaluation of existing zoning and policy frameworks. Traditional city planning, with its rigid separation of industrial, residential, and commercial zones, now appears increasingly ill-suited to the realities of modern e-commerce. The need for logistics operations to establish a presence within urban, non-industrial areas to facilitate last-mile delivery is blurring these long-established boundaries, demanding a new dialogue between urban planners, policymakers, and the logistics industry.
As per estimation around 40% of India’s population will reside in urban areas by 2030, underscoring the urgency of this policy recalibration. This rapid urbanization brings with it inherent pressures on land availability, property prices, and city infrastructure, making smart land use not just desirable but a strategic imperative for sustainable growth.
Developer Innovation: Adapting to Urban Constraints
From a developer’s perspective, the need for speed and convenience is driving a shift towards agility and innovation. The traditional model of sprawling, peripheral warehouses is giving way to smaller, modular, and vertically integrated structures designed to operate effectively within the constraints of urban environments. This is evidenced by the increasing adoption of design innovations such as multi-story warehouses, below-ground storage solutions, and sophisticated robot automation systems. These advancements maximize space utilization and streamline operations within high-density urban settings, demonstrating how developers are proactively adapting to the evolving demands of urban logistics to maintain competitiveness and relevance.
Looking Ahead: A Sector on the Move
Looking ahead, India’s urban logistics real estate sector is set for sustained growth, driven by the relentless rise of e-commerce. Demand for well-located, tech-enabled, and efficient logistics assets is accelerating. Strong leasing activity in Q1 2025 and rising interest from domestic and global players—especially from the EMEA and Americas—reflect long-term investor confidence in the Industrial & Logistics (I&L) market. With India emerging as a strategic logistics hub in Asia-Pacific, the I&L sector is rapidly evolving into a key enabler of digital commerce and economic growth.
