PEBs: RE-ENGINEERING GROWTH.

Growth in the warehousing and industrial sectors is expected to drive the demand for pre-engineered structures. Prajakta Karnik takes a peek into the demand drivers, opportunities, its challenges and the way forward for the sunrise industry.

Pre-engineered buildings or PEBs are factory-built buildings of steel that are assembled on site. These steel structures have gained popularity in the last nearly two decades especially on the back of rising demand for warehousing, led by the focus on Make in India and smart cities.

GROWTH OF PEB

In earlier days, warehouses were constructed with traditional brick and mortar construction which was followed by steel buildings with trusses and other types of sections. But with the advent of sustainable construction, pre-engineered steel buildings (PEB) technology came into limelight in the warehousing segment.

"The success of PEB in warehousing was because of the usage of light sections when compared to heavy sections with more weight in truss type buildings thereby making them more expensive. This erstwhile concept in India has now become a widely accepted solution with proven benefits for construction in the Indian environment," says D Raju, MD Kirby Building Systems & Structures India.

He noted that Kirby India is the torch bearer for introducing the PEB technology in India and its warehouse buildings are customized to meet the unique demands of the customers.

"As a result, today Kirby has become synonymous with PEB warehouse buildings in the Indian market mainly because of its unmatched speed of construction, quicker delivery, highest quality and commitment, excellent customer service, good safety practices, future expansion, etc. Today PEB technology has become one of the most preferred modes of construction for warehouses being setting up across India," Raju added.

According to Aditya Virwani, COO Embassy Group, the warehousing market has evolved in the last five years. "The volume and clear space/column free spaces are the backbone of warehousing requirements. This can be achieved by steel buildings which were traditionally done using standard steel sections, before PEB came into picture. Since the per square steel consumption was always on the higher side, cost optimization remained a challenge. With PEB, this problem was solved and this is the reason for increased demand for PEB in the industry," he said.

ADVANTAGES OF PEB

Chandranath Dey, Property consultant JLL India Head of Industrial Operations, Business Development, Industrial Consulting & Supply Chain Consulting explained that PEBs bring in what's probably a very important aspect in the warehousing and manufacturing space - speed.

"It brings advantage of speed of construction with a very reliable quality output acceptable by users and tenants worldwide. PEB buildings in these asset class brings down the construction timelines significantly to 6-9 months as compared to standard RCC (Reinforced Cement Concrete) buildings where the timelines can be as high as 2-3 years. Additionally, due to lesser construction period, construction debts comes out cheaper due to lower moratorium period and faster leasing of spaces," he said.

Gautam Suri, CTO & Founder Director, Interarch Building Products said the biggest advantage of the steel structures is their shorter turnaround time and the ability to build large structures which are sturdy, well ventilated and insulated and have a longer lifespan.

According to Raju the advantages of PEB in the warehousing segment include factory controlled fabrication on CNC machines, most optimized design due to usage of standard design softwares, large scale material procurement by Kirby India thereby lessening the costs, reduction in manpower costs and time because of supply of material without any delay, accident free installation with the highest safety and many such factors.

DEMAND DRIVERS

Significant infrastructure growth and rising demand in areas such as automotive, power, logistics, pharma, FMCG, and capital goods are posing a huge growth opportunity for the PEB sector to grow in the country.

According to the Pre-Engineered Buildings Market Report, pre-engineered buildings market is valued at around USD 13.7 billion as on 2018 and is anticipated to grow with a healthy growth rate of more than 11.2% between 2019-2026. "With the advancement in construction technology, the demand for cost-effective and less time-consuming engineered structures has been increasing," it said.

"Pre-engineered steel construction and metal roofing and cladding systems are finding great potential in the warehousing sector in the last few years and it is expected to grow in the future. The advent of GST - one nation, one tax - and favourable policies have boosted the warehousing sector. Also, the E-commerce boom, especially which we saw last year amid the Covid pandemic, along with the rise in FMCG and 3PL companies are expected to invest heavily in warehousing capacities. Many companies are not just leasing warehousing space but also setting up their new warehouses. This will drive the demand for the pre-engineered steel buildings," Suri said.

Raju also noted that post implementation of GST and granting of infrastructure status to the logistics segment by the Indian Government, India has witnessed rapid growth in the warehousing segment.

"E-commerce is one of the key growth drivers because of increase in online shopping and is also supported by government's initiative of creating world class infrastructure by setting up warehouses & cold chains across India for storage of food grains, vegetables, household consumption products, other goods, etc. and also encouraging corporates to develop ultra-modern logistics parks with latest automation technologies. This will create a supply chain eco-system which will enable to bring down the overall logistic costs which is one of the highest in the world," he added.

CHALLENGES

PEB industry has grown leaps & bounds over the last two decades and the industry consisting of top organized players is maturing to take it to the next level of growth trajectory. The industry is overcoming many challenges by continuous knowledge sharing across seminars, conference, industry forums, colleges and education curriculum, among others, to the target audience thereby increasing the popularity.

"A major challenge are prices of raw material - coils & plates which are highly volatile in nature. However, Kirby India is able to overcome the same by entering into long term contracts with steel manufacturers. Also, with the construction & infrastructure industries rapidly growing by adopting advanced construction technologies such as steel construction, these sectors are facing serious challenge of availability of manpower at various project locations across India including reduced output and number of orders because of postponement of decision making due to ongoing Covid-19 pandemic. At this crucial juncture, many companies are looking at pre-fabricated steel construction as it employs less labour at sites," Raju said.

Echoing similar views, Suri said the rising steel prices and shortage of steel supply, especially in the last six months, have posed a severe challenge to the PEB industry.

PEBs IN RESIDENTIAL REAL ESTATE

Since rapid construction, affordability, architectural versatility, environment friendly material, flexibility for expansions, low maintenance, single source responsibility and earthquake resistance properties, are some of the advantages of PEB steel structures could make a major contribution in the governments ‘Housing for All’ policy.

"Government's initiatives such as Housing for All and Smart Cities will also propel the demand for PEBs. Construction of over 2 crore houses by 2022 is one of the largest reform exercise taken by the government in 2015 which can be only achieved through advanced & sustainable construction technology such as PEB where cold form steel sections are used as they are light gauge structures. Smart Cities is another area where all the infrastructure can be developed using PEB technology. All these and various other initiatives will propel the demand for steel construction in coming years. However, residential segment is yet to see the use of PEB as this will take some more years before it is fully adopted though some buildings have come up across cities using steel construction," Raju said.

According to Suri, if apartments are built with steel structures, they require fire protection as a mandatory requirement from a safety point of view. “Though these steel structures ensure speed, the cost is relatively high. Also, the implementation of the safety and other mandatory requirements only increases the cost. These structures can be viable only in residential villas but not for high-rise apartment blocks. Also, since the residential segment is suited to be developed and sold in installments because the buyer is comfortable buying in installments, so few builders consider the steel structure for their residential projects. Further, steel requires capital and deep pockets. Therefore, steel construction has not picked up in the residential segment, and I don’t think it will work in the future. Since factory manufactured structures are not low cost, it doesn’t work for low-cost housing."

WAY FORWARD

According to JLL Industrial research, top 8 cities including Delhi NCR, Mumbai, Chennai, Kolkata, Pune, Bangalore, Hyderabad and Ahmedabad, doubled its industrial / warehousing supply from 118 million sqft in 2016 to 238 million sqft in 2020, a net addition of 120 million sqft in 5 years.

"Much of these 120 million sqft would be PEB buildings. Additionally, the same is projected to reach 360 million sft by 2023 i.e. an additional 120 million sqft is expected to be added in the next 3 years. This show a robust growth for PEB building in the coming years," Dey added.

Virwani explained the adoption of PEB can be further optimized by-

• Adopting ‘pod-lifting' in which all the assembling happens at the ground and then the unit is lifted to be placed in its actual location
• Profiling the roof sheets by using a profiling machine at site, to run sheets from eave to ridge without any joints and laps
• Engaging the installation teams to progress on either side of the aligned braced bay to complete framing faster
• In PEB, the space requirement is designed, fabricated, and shipped to the site for installation, which is very simple and customised to suit the requirement and it saves the execution time by half, as compared to any RCC buildings”.

Raju also noted that the PEB industry is estimated to report good growth in coming years because of increasing awareness and rising demand for steel buildings across manufacturing, warehousing, high rise commercial buildings, airport terminals, railways stations, bridge girders, etc.

“Kirby has more than 250 projects running at one single time under different stages of project lifecycle right from design, detailing, fabrication, construction, etc. We continue to invest in our R&D and product & technological upgradation such as design, fabrication, construction, etc. in order to provide our customers with the latest & best products & services. We have executed more than 35,000 unique buildings right from 50 MT to a recently completed 30,000 MT project catering to every type of customer for different applications spread across all the industry segments and sub-segments. High rise buildings especially commercial space is one of the focus areas which is witnessing rapid increase in adoption of steel structures,” he added.

Suri noted that with steel catching up, especially in commercial real estate, we would pre-engineered steel growth in IT office buildings or data centers, which are the future markets. "We are also diversifying our portfolio and adding capacity and products to cater to the future demand. At present, we are the second-largest player in the segment and have nearly 1,30,000 MTPA structure capacity, and we intend to increase this by adding new plants and products," he added.

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