Logistics leasing volumes in India will exceed 50 million square feet in 2024. This will mark the third consecutive year with leasing volumes surpassing 50 million sq ft. A report by Cushman & Wakefield highlights the growth in India’s logistics and industrial (L&I) real estate sector.
What Drives the Growth of Logistics Leasing Volumes?
The expansion of retail and e-commerce has driven logistics leasing volumes. The industrial sector has also experienced strong growth. Since the introduction of the Production-Linked Incentive (PLI) scheme in 2020, industrial leasing has increased. Demand for logistics spaces continues to rise as a result. Additionally, the engineering & manufacturing (E&M) sector and the growth of third-party logistics (3PL) operators have fueled the surge.
Trends in India’s Warehousing Sector
Warehousing leasing volumes have remained strong in 2024. However, rental prices have stayed flat across most submarkets. Only a few exceptions have seen rental growth due to high demand. Experts expect this trend to continue in 2025 as new supply enters the market.
Logistics Leasing Volumes and the China+1 Strategy
India benefits from the global China+1 strategy. Many international companies are moving their operations outside of China. This shift has increased the demand for logistics spaces in India. As global firms diversify their supply chains, India’s growing consumption base makes it an attractive market for investment.
Key Cities Driving Logistics Leasing Volumes
Pune, Chennai, and Bengaluru are experiencing strong leasing volumes. These cities have become key logistics hubs, fueled by the growing industrial and retail sectors. Other cities also show positive leasing trends, with peripheral areas attracting developers due to lower land prices.
Land Supply Constraints and Rising Land Prices
Land prices have surged significantly in major cities. In Gurugram, Pune, and Thane, prices have increased by 20-25% in 2023 and 2024. As land prices rise, developers are looking for new locations with more affordable options. This trend may lead to the development of Grade-A warehouses in areas with lower land prices.
The Future Outlook for Logistics Leasing Volumes
Experts predict a positive outlook for logistics leasing volumes in 2025. The continued growth of India’s retail sector, manufacturing activity, and e-commerce will drive demand. Over the next 2-3 years, 25 million sq ft of Grade-A warehousing space will hit the market. Major projects will focus on cities like Mumbai, Pune, Chennai, and Bengaluru.
Conclusion
Logistics leasing volumes in India will keep growing, driven by the expansion of industries and retail. While rising land prices pose challenges, the future looks promising. New developments will meet the growing demand for logistics and industrial space. In 2024, logistics leasing volumes will exceed 50 million sq ft, marking a strong year for India’s logistics and industrial real estate market.
