With the expansion of India’s quick commerce (q-commerce) sector, a substantial rise in demand for dark stores is reshaping the country’s real estate landscape. Dark stores, small urban warehouses designed for rapid order fulfillment, are fast becoming a crucial element in meeting the logistics needs of the q-commerce industry. According to a recent report by JLL and Miebach Consulting, India’s dark store space demand reached approximately 24 million square feet in 2023, with projections pointing to a steady compound annual growth rate (CAGR) of 12%, potentially reaching 37.6 million square feet by 2027.
Driven by the growth of the q-commerce sector, which Deloitte estimates could surge to $40 billion by 2030, demand for urban micro-fulfillment centers is spreading across densely populated urban areas. These mini-warehouses, spanning between 2,500 to 4,000 square feet, are often strategically placed based on factors like local demand, rental prices, and traffic patterns.
Real Estate Impact: Rising Prices and Shifting Demand Patterns
Historically, premium real estate in India has been centered on main roads and high streets. However, dark stores have transformed this dynamic, making properties in non-central locations valuable. Emiza, a Mumbai-based warehousing firm has reported that dark stores have fueled real estate price increases in both Tier-I and Tier-II cities. This shift has created fresh opportunities in urban real estate, providing landlords with new revenue streams as vacant spaces are repurposed into dark stores.
These repurposed spaces allow property owners to maintain occupancy rates while simultaneously meeting the demand from q-commerce operators. Urban locations such as mixed-use facilities, underutilized industrial zones, and even empty parking lots have become ideal for these centers, allowing q-commerce players to potentially cut logistics costs by up to 30%, according to JLL data.
Diverse Demand Across Urban Centers
In FY24 alone, Blinkit opened 149 new dark stores, growing its network to over 526 locations, with plans to hit 1,000 by the end of FY25. Similarly, Zomato expanded its warehousing by 28% year-on-year, adding to its dark store operations. Swiggy, in preparation for its upcoming IPO, reported 523 active dark stores in FY24, an increase from 421 the previous year, with further plans to expand this count. Delhivery, a key player in third-party logistics, is also stepping into the market with dark stores aiming to provide two-to-four-hour delivery options for direct-to-consumer (D2C) brands.
This urban expansion is not limited to central business districts (CBDs) but extends into secondary business districts (SBDs) and beyond, particularly in metropolitan areas and Tier-II and Tier-III cities. Demand for these spaces in prime real estate zones is creating a new asset class for landlords, who can now earn rental income ranging from ₹40 to ₹200 per square foot monthly. Dark stores in Delhi, for instance, command the highest rental rates among major Indian cities, at ₹150-200 per square foot monthly, according to Savills India.
Regulatory and Compliance Challenges
Despite the promising growth trajectory, there are compliance challenges surrounding dark store expansion, especially with zoning and regulations. Many dark store facilities face issues such as traffic congestion, fire safety clearances, and lack of regulatory compliance. Dark store operators have also encountered challenges with property hygiene, accessibility, and structural compliance.
A Promising Future for Dark Stores and Real Estate
The q-commerce sector’s need for rapid, last-mile delivery is redefining urban logistics and bringing new growth potential for India’s real estate market. With dark stores projected to grow further, real estate developers and q-commerce companies alike have a unique opportunity to adapt to evolving consumer behaviors, benefiting both industries and consumers as India’s e-commerce landscape expands.
