India's Logistics Absorption Soars to New Heights

JLL Grade A warehousing stock surges 170% in the last five years, reaching 238 million sq. ft. in CY 2024

• Grade A warehousing stock in top eight cities has grown from 88 million sq. ft. in 2019 to 238 million sq. ft. in 2024, marking a CAGR of 22%.
  
  
• Grade A average rent reached INR 24.8 per sq. ft. per month, with a 4.6% Year-on-Year (Y-oY) growth.
  
  
• Total stock across top eight cities reached 438 million sq. ft., projected to hit ~700 million sq. ft. by 2028.
  
  
• Net Absorption clocks ~25% year of year growth at 50.4 million sq. ft in 2024 indicating strong tail wind of growth.
  
  
• Gross absorption (Net Absorption + Renewals + Churnings + Vacated space) for 2024 stood at 68.9 million sq. ft., up from 58.7 million sq. ft. in 2023.
  
  
• 3PL/Logistics and manufacturing sectors led in absorption with revival of e-commerce demand in 2024 specifically from quick commerce companies.

MUMBAI, 21 JANUARY 2025: The logistics and industrial real estate sector in India demonstrated robust growth in 2024, according to JLL India's report titled “State of the Nation Logistics & Industrial.” The market saw significant expansion in Grade A warehousing, with stock in the top eight cities (Mumbai, Delhi NCR, Bengaluru, Chennai, Kolkata, Hyderabad, Mumbai, Pune, and Ahmedabad) growing from 88 million sq. ft in 2019 to an impressive 238 million sq. ft. in 2024, representing a Compound Annual Growth Rate (CAGR) of 22%. This growth is driven by the occupiers increasingly looking for good quality and compliant spaces as well as rising traction from the institutional investors in the sector.

The total stock across the top eight cities reached 438 million sq. ft, with projections suggesting it could hit approximately 700 million sq. ft by 2028. 

Source: JLL

Source: JLL

Demand remained strong, with net absorption for 2024 reaching an all-time high of 50.4 million sq. ft, up from 40.6 million sq. ft in 2023. The 3PL/Logistics and manufacturing sectors led the absorption in the market accounting for more than 65%. The year 2024 also witnessed revival of demand from ECommerce sector, especially from quick commerce companies.

"Manufacturing leased factories demand scaled new peak in 2024 accounting for more than 30% of the demand providing manufacturers faster and efficient entry/expansion option. Grade A warehousing is taking centre stage with close to 80% of net absorption under this category, driven by availability and superior infrastructure. Rents for Grade A warehouses rental per sq. foot per month, showing a Y-o-Y growth of around 5%,” said Yogesh Shevade, Head – Logistics & Industrial, India, JLL.

Source: JLL

The manufacturing sector has seen significant leasing activity, with approximately 40-45 million sq. ft. leased in the top eight cities over the past three years (2022-2024). This trend along with the government push through initiatives such as Make in India 2.0 and Production-linked Incentive (PLI) Scheme, are providing an easy entry route for manufacturing operations.

Overall, the Indian logistics and industrial real estate sector is showing remarkable resilience and growth potential, positioning India as a key player in the global supply chain landscape.

Looking ahead, the demand for Grade A warehousing spaces, distinguished for their superior infrastructure, is expected to remain buoyant. Institutional developers and investors are actively prioritizing resources for the development of high-quality Grade A warehousing spaces. The growing preference among occupiers and investors for technology adoption & sustainable logistics facility for optimizing long term operational cost efficiency and achieving net-zero ambitions.

*Logistics & Industrial stock includes warehousing and light manufacturing spaces of Grade A and Grade B categories on lease. It does not take into consideration Grade C projects, the stock owned by Government, ICD, FTWZ and captive warehousing stock by manufacturing companies that are within or beyond their premises