Warehouses: The undervalued territories of Real Estate in Kenya

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Warehouses can carry an air of being unconventional and grainy. Their somewhat mundane functional designs as well as the fact that they are mostly located out of town are some of the reasons they are not considered to be an appropriate space. What most people do not realise is that, they hold immense unforeseen potential.

Warehousing offers many advantages to the business community. Whether it is industry or trade, it provides many benefits which are listed below:

i. Protection and Preservation of goods – Warehouse provides necessary facilities to the businessmen for storing their goods when they are not required for sale. It provides protection to the stocks, ensures their safety and prevents wastage. It minimises losses from breakage, deterioration in quality, spoilage etc. Warehouses usually adopt latest technologies to avoid losses, as far as possible.

ii. Regular flow of goods – Many commodities like rice, wheat etc. are produced during a season but are consumed throughout the year. Warehousing ensures regular supply of such seasonal commodities throughout the year.

iii. Continuity in production – Warehouse enables the manufacturers to carry on production continuously without bothering about the storage of raw materials. It helps to provide seasonal raw material without any break, for production of finished goods.

iv. Convenient location – Warehouses are generally located at convenient places near road, rail or waterways to facilitate movement of goods. Convenient location reduces the cost of transportation.

v. Easy handling – Modern warehouses are generally fitted with mechanical appliances to handle the goods. Heavy and bulky goods can be loaded and unloaded by using modern machines, which reduces cost of handling such goods. Mechanical handling also minimizes wastage during loading and unloading.

vi. Useful for small businessmen – Construction of own warehouse requires heavy capital investment, which small businessmen cannot afford. In this situation, by paying a nominal amount as rent, they can preserve their raw materials as well as finished products in public warehouses.

vii. Creation of employment – Warehouses create employment opportunities both for skilled and unskilled workers in every part of the country. It is a source of income for the people, to improve their standards of living.

viii. Facilitates sale of goods – Various steps necessary for sale of goods such as inspection of goods by the prospective buyers, grading, branding, packaging and labelling can be carried on by the warehouses. Ownership of goods can be easily transferred to the buyer by transferring the warehouse keeper’s warrant.

ix. Availability of finance – Loans can be easily raised from banks and other financial institutions against the security of the warehouse-keeper’s warrant. In some cases, warehouses also provide advance to the depositors of goods on keeping the goods

x. Reduces risk of loss – Goods in warehouses are well guarded and preserved. The warehouses can economically employ security staff to avoid theft, use insecticides for preservation and provide cold storage facility for perishable items. They can install fire-fighting equipment to avoid fire. The goods stored can also be insured for compensation in case of loss.

It’s still all about strategic location, good management and a well-organized supply chain. Plus, with technology evolving all the time, warehouse settings are getting smarter and more efficient. According to the latest Knight Frank Logistics report, Nairobi lacks satisfactory warehouse space.

ALSO READ: Kenya experiences warehouse construction boom -Report

What was once considered to be one of the most underrated aspects of real estate around the world has now in Nairobi, due to the scarcity of high quality warehouses, created a huge demand for them. The new by-passes around Nairobi have enabled a freeing up of transport routes and the intersections of these new roads have become hot spots for logistics parks such as Tilisi, Tatu Industrial & Logistics Park, Northlands Commercial Park, Infinity Industrial Park and Nairobi Gateway Logistics Park.

Construction of the modern warehousing in Kenya is expected to boost growth, employment and trade across a range of industries as well as seek to bridge the gap in top-end logistics infrastructure in the region. Possible users of such warehouses could include shippers seeking safe storage of their shipments for distribution or onward transit to neighbouring countries. Not only are warehouses suitable for storage but can incorporate other beneficial use such as office space and perhaps as investment and renting purposes.

The Kenyan market has yet to embrace these innovations. Many efforts have been made by the various logistics players to incorporate technology to boost service delivery. Winstone Akweyu, Operations Manager at Siginon Global Logistics, avers that there are many opportunities for automating warehouse operations through automation of storage, compact picking, zone picking and integrated picking, as well as warehouse and AGV systems. Although these systems require high capital investments, the returns on business and customer satisfaction are rewarding in the long run.

By Gwadiva Andrew