In the rapidly evolving landscape of quick commerce, the concept of dark stores has emerged as a crucial player. These small urban distribution centres are becoming essential to meet the growing consumer demand for ultra-fast deliveries. As of 2023, the demand for dark store space in India reached an impressive 24 million square feet (msf), with an expected growth of 12% CAGR to 37.6 msf by 2027, as reported by a joint study by JLL and Miebach Consulting.
What Are Dark Stores?
A dark store is essentially a compact warehousing space dedicated to fulfilling online orders. Unlike traditional warehouses, which stock large quantities of goods, dark stores maintain a smaller inventory, often consisting of items with a short shelf life. These stores, typically spanning between 3,000 to 8,000 sq ft, are strategically located close to densely populated residential areas to ensure quick deliveries.
According to Srinivas N, Managing Director, Industrial and Logistics, Savills India, “Dark stores play a key role in enabling quick commerce by stocking frequently ordered products and offering round-the-clock service. This reduces transportation costs and improves last-mile delivery efficiency.”
The Surge in Dark Store Demand
The demand for dark stores is being driven by the quick commerce sector, which has gained momentum since the COVID-19 pandemic. Platforms like Swiggy Instamart and Blinkit have rapidly expanded their dark store networks, especially in Tier 1 and Tier 2 cities. Blinkit plans to increase its dark stores to 2,000 by FY26, up from 639 in June 2024, while Swiggy Instamart is expanding into Tier 2 and Tier 3 cities to deliver groceries and household items within 10 minutes.
The demand for faster delivery times, sometimes as short as 30 minutes, has fueled the growth of dark stores. This has not only revolutionized consumer expectations but also added complexity to supply chain operations.
Dark Store Rentals in Indian Cities
The rental values for dark stores vary significantly across Indian cities. Delhi commands the highest rental prices at Rs 150-200 per sq ft per month, followed by Mumbai at Rs 80-150 and Bengaluru at Rs 60-100. These spaces are usually found in low-cost areas such as basements, parking spaces, or defunct facilities, as dark stores do not require foot traffic or prime real estate.
The lease terms for dark stores are generally shorter, with a typical lock-in period of 9–12 months and a lease term of two to three years. Landlords usually require a security deposit ranging from four to six months of rent, and tenants are responsible for maintaining the premises and utility bills.
Challenges to Expanding Dark Stores
Despite their rapid expansion, dark stores face several challenges. One of the main hurdles is finding affordable yet strategically located properties. In cities like Bengaluru, where real estate prices are steep, finding a balance between cost and location can be difficult.
Furthermore, only about 10-15% of dark stores are currently compliant with local municipal regulations, which poses operational risks. According to Anuj Kejriwal, CEO & MD of ANAROCK Retail, the rising cost of property ownership in prime areas, coupled with logistical challenges like traffic congestion, further complicates the expansion of dark stores.
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Conclusion
The demand for dark stores is set to grow as quick commerce continues to redefine consumer expectations. With increasing competition and the need for speed, dark stores will play an even more critical role in meeting delivery timelines. However, for this model to be sustainable, dark store operators must overcome regulatory hurdles, property costs, and logistical challenges.
