The industrial and warehousing sector in India is experiencing a strong surge in demand, with a remarkable 17% year-on-year (YoY) growth in leasing activity during the first nine months of 2024. Across the top five cities, approximately 20.2 million square feet (mn sq ft) of Grade A industrial and warehousing space was leased from January to September 2024, signaling a steady recovery and increasing momentum for the sector.
Delhi NCR and Chennai were the driving forces behind this growth, collectively accounting for more than half of the overall leasing activity. Delhi NCR, in particular, saw a significant increase in demand, with a 156% rise in Q3 2024 compared to the same period last year. Chennai, too, saw an impressive YoY increase of 17%, cementing its position as a key hub for industrial and warehousing activities.
Key Demand Drivers: 3PL, Engineering, and FMCG Sectors
The demand for industrial and warehousing space was predominantly led by Third Party Logistics (3PL) companies, which accounted for 35% of the total leasing activity in 2024. Engineering and Fast-Moving Consumer Goods (FMCG) sectors also contributed significantly, together accounting for 32% of the space uptake during the year.
“The demand from engineering firms was notably strong in both Chennai and Delhi NCR, while the FMCG sector continued to show resilience,” said Vijay Ganesh, Managing Director of Industrial & Logistics Services at Colliers India. “The rise of Q-commerce and heightened demand from the electronics sector, which saw a twofold increase in leasing compared to 2023, are also contributing to this growth.”
Grade A Supply on the Rise
In tandem with the demand surge, supply of Grade A industrial and warehousing space also grew significantly, with 22 million sq ft of new space coming online in the first three quarters of 2024—a 29% increase from the previous year. Delhi NCR alone accounted for 35% of this new supply, with approximately 7.6 million sq ft of completions.
Despite this influx of supply, overall vacancy levels remained stable at around 12-13%, highlighting a favorable demand-supply dynamic in the market.
Quarterly Trends and Large Deals
In Q3 2024, the industrial and warehousing sector saw an 18% YoY increase in leasing activity, with 7.3 million sq ft of space being absorbed across the top five cities. Delhi NCR continued to dominate this quarterly activity, accounting for nearly one-third of the demand, primarily driven by large deals in the Bhaproda and Kulana micro-markets.
Large-sized deals, particularly those exceeding 200,000 sq ft, played a significant role in the market. In fact, large deals accounted for 40% of the total leasing activity during the first nine months of 2024. Key transactions included deals by global logistics giant DHL in Bhiwandi, and a notable leasing by DMart in Delhi NCR’s Kulana micro-market.
Outlook for the Future
With the ongoing festive season and increasing demand for quality industrial and warehousing spaces, experts anticipate that 2024 could close with a record leasing volume, potentially surpassing 25-30 million sq ft. The strong demand, coupled with supportive government policies, improving logistics efficiencies, and India’s growing role as a global manufacturing hub, is expected to maintain momentum in the sector.
“Given the healthy demand and the confidence among developers, we expect 2024 to end on a high note, with leasing activity reaching historic levels,” said Vimal Nadar, Senior Director and Head of Research at Colliers India.
As the industrial and warehousing sector continues to evolve, the focus is shifting towards sustainable and technologically advanced Grade A spaces, meeting the growing expectations of tenants in sectors such as electronics, retail, and logistics. This shift, combined with a strong pipeline of new supply, is poised to further fuel the sector’s growth in the coming years.
