Exploring India’s thriving logistics and warehouse landscape

Total warehousing stock, including Grade A and B, across *eight cities stood at 371 million sq ft by the end of 2023, up from 329 million sq ft a year ago, according to JLL’s latest report titled ‘Exploring India's Thriving Logistics and Warehousing Landscape’. In 2023, India witnessed a 15% Year-on-Year (Y-o-Y) growth in total stock in Grade A & B warehousing space in the top eight cities. The overall warehousing space stands at 371 million sq. ft at the end of 2023. Among the eight major cities, more than half of the warehousing stock is contributed by the country's three largest cities, including Delhi NCR, Mumbai, and Bengaluru.

The warehousing sector has shown robust recovery in 2021 and significant growth in the subsequent years. The year 2023 witnessed a net demand of 40 million sq. ft with ~70% of the demand observed in Grade A space. This shows a shift in occupiers’ preference towards quality spaces due to adherence to additional hygiene and safety norms during COVID-19. Pune witnessed highest absorption with 8 million sq. ft. of net absorption driven by the growing manufacturing demand in the country, propelled by government initiatives such as Make in India and Production Linked Incentives Schemes. Mumbai and Delhi NCR, known as the largest warehousing markets, closely followed Pune with net absorption of ~7 million sq. ft. each.

Source: JLL Logistics & Industrial

With the increasing demand in the market, there is a marginal dip in overall vacancy rate, reaching 15% in 2023, and is expected to further decrease to 8% in 2027. The Grade A vacancy has witnessed a significant decrease from 7% in 2022 to 5% in 2023, and it is projected to remain below 5% in 2027 due to strong demand for quality and compliant spaces.

After a period of slow growth in rent over the past five years, rents have witnessed an upward correction in 2022 and 2023 due to increasing land prices and construction costs. The overall rent has increased with a 6% year-on-year growth rate from 2021 to 2023.

While, 3PL/Logistics has remained the largest segment based on warehousing space demand over the years, the other significant contributors to the demand in 2023 are manufacturing sectors, including Engineering and Auto and Ancillaries as manufacturing demand revived post-COVID lockdown. Demand from Retail and FMCG sectors has remained consistent in 2023 with the increasing disposable incomes and consumption-led demand. Space demand due to E-Commerce has gained traction in the last few years due to a behavioural shift from making offline purchases to online.
Download the report for a more in-depth understanding of the factors shaping the business case of investment opportunities in the Indian logistics sector.