Indian Warehousing Market Overview – 2024
In 2024, India’s warehousing market experienced a 12% year-on-year (YoY) growth, with total warehousing transaction volumes reaching 56.4 million square feet (mn sq. ft.), up from 50.3 mn sq. ft. in 2023. This growth reflects the rising demand for warehousing space across the country’s primary markets. The market’s development potential is substantial, with 233 million square feet (mn sq. ft.) of unutilized land in primary markets available for future development, which is about four times the transaction volume recorded in 2024. The expansion of warehousing space is essential to meeting the growing demand driven by industries such as manufacturing, 3PL (third-party logistics), and e-commerce.
Demand for Grade A Warehousing Space
- Grade A warehousing—spaces with modern infrastructure and technology—has continued to see increasing demand. In 2024, 62% of the total transaction volume was in Grade A spaces, up from 57% in 2023. This represents 34.71 million square feet of Grade A warehousing transacted in 2024.
- Businesses are opting for high-quality warehousing solutions due to their operational efficiency, better technology integration, and suitability for modern supply chain needs.
Top Warehousing Markets: Mumbai & NCR
- Mumbai remains the top warehousing market in India, accounting for 18% of total transactions, with 10.3 million square feet transacted in 2024. The 3PL sector was the primary driver of demand in Mumbai, contributing 43% of the total area transacted. Mumbai’s strategic location, robust infrastructure, and proximity to key consumer markets and ports make it a dominant player in the warehousing sector.
- National Capital Region (NCR) followed as the second-largest market, transacting 16% of the total volume. The demand in NCR came from both the 3PL sector (38% of transactions) and manufacturing (24%), which reflects NCR’s role as a major logistics hub supporting both distribution and industrial operations.
Growth in Other Key Markets
- Cities like Bengaluru, Kolkata, Ahmedabad, and Chennai witnessed strong growth in transaction volumes, ranging from 25-29% YoY in 2024.
o In Bengaluru, Ahmedabad, and Chennai, the manufacturing sector was a significant driver of demand for warehousing space. Manufacturing companies sought modern facilities to improve their logistics and storage capabilities.
o In Kolkata, the demand was driven by the 3PL and e-commerce sectors, highlighting the city’s emerging role as a hub for large-scale distribution centers and fulfillment facilities.
The Manufacturing Sector’s Contribution
- The manufacturing sector (excluding FMCG and FMCD) accounted for 39% of the total warehousing demand, leasing 22 million square feet in 2024. This sector saw an 18% YoY growth in warehousing space, reflecting the increasing need for storage and distribution facilities as manufacturing operations expand.
- The growth of India’s manufacturing sector is crucial in driving the warehousing demand, as more companies look for space to optimize their supply chains and manage inventory efficiently.
Surge in Private Equity Investments
- The warehousing sector witnessed an impressive rise in Private Equity (PE) investments, which reached USD 1,877 million in 2024—an increase of 136% from USD 684 million in 2023. This surge in investments underscores the growing confidence in the sector, driven by the continued expansion of e-commerce, 3PL, and manufacturing sectors.
- The increase in PE investments is also reflective of the strategic importance of warehousing in optimizing logistics and supporting the rise of online retail, which requires sophisticated, large-scale distribution infrastructure.
Secondary Markets: Growth Beyond Major Hubs
- While primary markets (Mumbai, NCR, Bengaluru, etc.) continue to dominate, secondary markets have also seen growth. In 2024, these markets grew by 6% YoY, with 11.4 million square feet of warehousing space transacted.
- Cities like Lucknow contributed the largest share of this growth, as businesses begin to leverage India’s hinterland consumer base, seeking efficient logistics solutions in secondary markets.
Vacancy and Rent Trends
- Vacancy rates in India’s warehousing market stood at 11.5% in 2024, which helped moderate rental growth. Despite rising rents, the relatively high vacancy rates have ensured that rent increases have been restrained. This provides a balanced environment for businesses looking to lease warehousing space while also supporting ongoing investment in the sector.
- Average rents have increased, but the rate of increase has been tempered by the current vacancy levels, keeping the market competitive and attractive for occupiers.
Future Development Potential
- The Indian warehousing market holds significant promise, with 233 million square feet of unutilized land in primary markets, which could support the development of new warehousing facilities. This indicates that the sector has the capacity to expand further in response to the growing demand for modern warehousing spaces.
- The continued expansion into secondary markets and the ongoing development of new infrastructure will be key to meeting the future demand, ensuring that businesses across the country can access efficient storage and logistics solutions.
The Indian warehousing market in 2024 is seeing significant growth, driven by robust demand from the manufacturing, 3PL, and e-commerce sectors. The market is evolving, with Grade A spaces becoming more desirable due to their modern infrastructure, and the continued expansion into secondary markets shows the sector’s growth potential beyond major urban hubs. The surge in Private Equity investments and the large development pipeline indicate that the warehousing sector will remain a key focus for real estate investors in the coming years. With substantial land availability for future development and increasing occupier demand, India’s warehousing sector is well-positioned to support the country’s growing economy and evolving supply chain needs.