This marks a sharp reversal from previous years, where nearly half of all PE investments were concentrated in warehousing and logistics assets, fuelled by India’s e-commerce boom, manufacturing push, and 3PL expansion.

While overall private equity inflows into real estate fell 15% year-on-year to USD 2.2 billion in H1 FY26, the complete absence of Industrial & Logistics deals stands out as one of the most striking trends this year.

From 47% Share to 0%: The Numbers Tell the Story

“Industrial & Logistics was conspicuous by its absence this half-year, though investor interest remains high for quality assets,” notes the ANAROCK report.

Why the Slowdown Matters

The Industrial & Logistics segment is considered a backbone of India’s economic and consumption story. Warehousing parks, fulfilment centres, and last-mile logistics facilities support the rapid growth of e-commerce, manufacturing (PLI schemes), and urban distribution.

Between FY22 and FY25, this segment consistently attracted some of the largest institutional deals, as global investors like Blackstone, ESR, IndoSpace, and GIC bet big on India’s consumption-led growth.

The absence of deals this half-year does not indicate a lack of interest — instead, it reflects:

• Timing gaps: Several large deals are currently under negotiation but are yet to close.
• Valuation resets: Investors and developers are recalibrating prices amid changing cost structures and yield expectations.
• Regulatory & land issues: Acquiring large contiguous land parcels remains complex in key logistics corridors.

Investor Sentiment Still Positive

Despite the pause, institutional appetite remains strong. ANAROCK notes that “several transactions are currently under discussion, and some are likely to be closed in the coming months.”

Globally, logistics continues to be one of the most stable real estate asset classes. In India, strong consumption demand, growing 3PL activity, and supply chain diversification continue to support long-term investment interest.

Why Homebuyers Should Care

At first glance, Industrial & Logistics deals may seem far removed from residential buyers. But in reality, this segment plays a critical indirect role in shaping housing markets:

• Logistics hubs create jobs in manufacturing, warehousing, transport, and e-commerce. These hubs often drive new housing demand in peripheral areas.
• When investor funding slows, logistics park development can lag, affecting planned township and affordable housing projects near industrial belts.
• Many logistics corridors are linked to new transport infrastructure, which also benefits residential connectivity.

A slowdown here may temporarily delay ecosystem development around major logistics corridors like MMR outskirts, NCR peripheries, and Chennai–Bengaluru industrial belts.

Winners This Year: Retail, Offices & Data Centres

While Industrial & Logistics took a back seat, Commercial Office assets took a 40% share, Retail 17%, and Mixed-use 19%. Data Centres, too, attracted 5% of inflows — a sign of diversification in investor focus.

Also Read: Warehousing & Logistics sector shows resilience amidst Investment drought 

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Key Features and Technology

The new warehouse is designed to manage the handling, storage, and distribution of the client’s electrical components. It is equipped with multi-tier shelving racks, heavy-duty racking, and on-floor storage to maximize capacity. For efficient goods movement, the facility uses advanced equipment such as reach trucks, spiral conveyors, and a Double Deep Battery Operated Pallet Truck (BOPT) design. The facility also leverages the SAP System and advanced scanning technologies for improved functional efficiency and is equipped with comprehensive safety measures, including firefighting equipment and an internal sprinkler system.

Strategic Partnership and Outlook

Ketan Kulkarni, Managing Director of Allcargo Supply Chain Pvt Limited (ASCPL), stated that the new warehouse strengthens supply chain agility and customer responsiveness in the region. The project reflects Allcargo’s commitment to delivering customized, tech-driven warehousing solutions to meet the unique needs of its clients. ASCPL currently manages over 7.5 million sq. ft. of warehousing space across more than 80 locations in India and is rapidly expanding its presence in major metro markets.

Also Read: Bhiwandi: Logistic firm Rents Property for ₹85 lac a month

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The project, located within the JNPA Special Economic Zone (SEZ) in Navi Mumbai, spans 55 acres and represents Welspun One’s largest logistics development to date. Designed as a Grade A industrial and warehousing facility, the park will cater to key sectors such as e-commerce, third-party logistics (3PL), fast-moving consumer goods (FMCG), and manufacturing.

With a total development potential of over 3.6 million square feet, the logistics park aims to redefine operational efficiency and scalability, strengthening India’s position as a global supply chain hub.

“This financial closure is a pivotal milestone in our journey to build world-class logistics infrastructure in India,” said Anshul Singhal, Co-Founder and Managing Director, Welspun One. “With NaBFID’s support, we are well-positioned to fast-track execution and deliver long-term value to our stakeholders. The JNPA project will set new benchmarks for the industry.”

NaBFID, established to catalyze investments in infrastructure, has extended a 22-year term loan for the project—an indication of both the project’s scale and NaBFID’s confidence in its long-term impact.

“We are proud to support Welspun One’s JNPA Logistics Park, a project aligned with the Government’s vision to reduce logistics costs to around 8% of GDP,” said Rajkiran Rai, Managing Director, NaBFID. “Projects like this will enhance India’s industrial competitiveness globally.”

Echoing the sentiment, Samuel Joseph, Deputy Managing Director, NaBFID, added, “Our mandate allows us to fund infrastructure projects with long gestation periods. The JNPA park stands out for being located in an SEZ and built to international specifications—making it a unique opportunity.”

The transaction was facilitated with support from a team of expert partners: CBRE provided technical due diligence, Saraf & Partners offered legal advisory, and BDO ensured financial compliance and verification.

This funding milestone further cements Welspun One’s position as a leading developer of institutional-grade warehousing and logistics parks, contributing meaningfully to India’s evolving infrastructure and economic ambitions.

Also Read: Bengaluru’s Warehouse Absorption Rises to 3.9 Mn Sq. ft.

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Investment Trends in Warehousing & Logistics

The past few years have seen fluctuating investment patterns in the warehousing and logistics sector. Despite a dip in 2023, investments rebounded strongly in 2024. The year saw the second-highest investment influx in the last six years, demonstrating growing investor confidence in the sector.

Year-wise Investment Trends

Record Absorption in 2024

The demand for warehousing space reached an all-time high in 2024, with a record absorption of 44.9 million sq. ft. This marked a 19% increase over the previous year. Notably, the second half of 2024 alone accounted for 28.3 million sq. ft. of absorption, a 70% jump compared to the first half—the highest ever recorded in a single year.

Yearly Absorption Trend

Sector-wise Absorption Trends

The absorption of warehousing space varied across different sectors, with 3PL companies leading the demand, though their share saw a decline compared to the previous year. Meanwhile, the engineering and manufacturing sector saw a significant uptick in absorption, driven by government incentives such as the Production Linked Incentive (PLI) scheme and the Make in India campaign.

Sector-wise Absorption in 2024 vs. 2023

City-wise Analysis

Warehousing absorption across major cities showed significant variations, with some cities witnessing a surge while others experienced a decline. Mumbai emerged as the leader in absorption, while NCR recorded the sharpest decline.

Highlights of City-wise Absorption:

• Mumbai reported the highest absorption at 18.6 million sq. ft. in 2024, growing by 82% compared to 2023. This surge is attributed to improved connectivity via the Navi Mumbai airport and the rise of quick commerce in major tier-1 cities.
• Pune recorded the highest growth rate in absorption among the top seven cities, increasing by 85% to 13 million sq. ft. However, rental rates declined by 3% to INR 22.9/sq ft/month.
• Chennai, Hyderabad, and Kolkata together accounted for 15% of the total absorption in 2024, down from 22% in 2023.
• NCR saw the most significant decline in absorption, dropping by 55% from the previous year. The region’s share in pan-India absorption plummeted from 23% in 2023 to just 9% in 2024.

City-wise Share in Absorption

Rental Trends

• Chennai had the highest rental rates in 2024 at INR 24.2/sq ft/month, witnessing an 11% increase due to limited land availability within city peripheries.
• Mumbai emerged as the most affordable warehousing market in 2024, with an average rental of INR 18.1/sq ft/month.
• Pune saw a depreciation in rental rates by 3%, bringing the average to INR 22.9/sq ft/month.

Key Takeaways:

• Investments in the W&L sector surged by 203% year-on-year, underscoring strong investor confidence.
• Warehousing absorption hit a record high of 44.9 million sq. ft., with Mumbai leading at 18.6 million sq. ft.
• The 3PL sector remained dominant but showed signs of fragmentation, while engineering and manufacturing saw increasing demand.
• Mumbai and Pune were the biggest gainers in terms of absorption, while NCR saw a sharp decline.
• Rental trends varied significantly, with Chennai experiencing the highest appreciation, while Mumbai remained the most affordable market.

Looking ahead, India’s position as a key logistics hub is expected to strengthen further. Positive investor sentiment, government policies, and infrastructure advancements will continue to shape the sector. However, challenges such as limited skilled workforce availability, regulatory hurdles, and land acquisition costs may need to be addressed to sustain this growth trajectory.

SFI Analysis

The warehousing and logistics sector in India demonstrated resilience and growth in 2024, fueled by increasing institutional investments and rising demand. The surge in quick commerce, robust infrastructure development, and government-led initiatives contributed significantly to this momentum.

Also Read: India’s tallest warehouse

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According to JLL India, the nation’s combined warehouse absorption across 20 major markets hit an all-time high of 60 million sq. ft. in 2024. Notably, Grade A spaces constitute around 30% of the total inventory in these emerging Tier II-III cities.

Tier II-III Cities Leading the Charge

The expansion of the warehousing market in emerging cities is driven by several factors, including the surge in e-commerce, rising demand for fulfillment centers, and infrastructure development. As companies seek to reduce logistics costs and enhance delivery speed, they are increasingly establishing warehouses in these cities.

Key data from JLL India’s report highlights the warehousing stock distribution and growth in Tier I and Tier II-III cities:

Regional Growth Trends

The report categorizes growth trends in emerging warehousing cities across India:

East India

• Total Stock: 22.8 million sq. ft. (6x growth since 2017)
• Key Markets: Bhubaneswar-Cuttack (5.6 million sq. ft.), Guwahati (8.0 million sq. ft.), Patna (9.2 million sq. ft.)

North India

• Total Stock: 35.6 million sq. ft. (4x growth since 2017)
• Key Markets: Chandigarh-Rajpura (14.1 million sq. ft.), Jaipur (6.0 million sq. ft.), Lucknow (8.5 million sq. ft.), Ludhiana (7.0 million sq. ft.)

South India

• Total Stock: 15.2 million sq. ft. (3x growth since 2017)
• Key Markets: Coimbatore (6.6 million sq. ft.), Kochi (8.6 million sq. ft.)

West India

• Total Stock: 21.2 million sq. ft. (3x growth since 2017)
• Key Markets: Goa (6.7 million sq. ft.), Nagpur (13.0 million sq. ft.), Nashik (1.5 million sq. ft.)

Industry Experts Weigh In

Yogesh Shevade, Head – Logistics & Industrial, India, JLL, emphasized the rapid growth of the warehousing sector in emerging cities. “Since the implementation of GST, the Indian warehousing market has expanded significantly in major cities. Now, the hub-and-spoke model is playing a critical role in spreading this growth to Tier II-III cities. In 2024, these cities accounted for nearly 100 million sq. ft. of stock, marking a fourfold increase since 2017. We anticipate continued expansion, fueled by infrastructure initiatives connecting these cities to major consumption hubs. This transformation is creating new investment opportunities for both investors and developers.”

Government Initiatives Fueling Growth

The expansion of warehousing in emerging cities is strongly supported by government initiatives such as PM Gati Shakti, Bharatmala, Sagarmala, and the UDAN Scheme. These programs are optimizing distribution networks and improving connectivity. Additionally, policies like Make in India, Digital India, and the National Logistics Policy are fostering a robust manufacturing ecosystem. Production-Linked Incentives (PLI) and Design-Linked Incentives (DLI) schemes are also encouraging companies to set up manufacturing units in these cities, further driving the need for high-quality warehousing infrastructure.

JLL’s Report Launched at LogiMAT India 2025

The findings were unveiled in “The Shifting Landscape of Warehouse Markets Report,” presented by JLL at LogiMAT India 2025 in Mumbai. The event, held at the Bombay Exhibition Centre, saw participation from key industry leaders, including Dr. P. Anbalagan (IAS), Secretary of the Industries Department, Government of Maharashtra, and Aditya Gupta, CEO of Messe Stuttgart India.

Aditya Gupta remarked, “This report by JLL aims to bridge the gap in India’s logistics and warehousing sector by highlighting the growing prominence of Tier II-III cities as new warehousing hubs. I believe this report will inspire discussions and strategic collaborations that will drive the industry forward.”

Conclusion

The rise of Tier II-III cities as warehousing hubs is redefining India’s logistics landscape. As businesses optimize their supply chains and enhance delivery efficiencies, the sector is poised for sustained growth. With continued investments in infrastructure and policy support, these cities are set to play a crucial role in the future of warehousing in India.

Also Read: India’s tallest warehouse

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“The warehousing & logistics sector is expanding rapidly to keep up with India’s economic growth,” said Ankita Sahu, Senior Manager – Industrial & Logistics I Data Centres, ANAROCK Capital. “In H1 2024, the sector captured a significant portion of PE investments, led by major deals such as Abu Dhabi Investment Authority (ADIA) and KKR’s USD 1.54 billion investment in Reliance Logistics & Warehouse Holdings’ warehousing portfolio.”

Key Drivers of Growth

The demand for logistics space continues to surge, fueled by third-party logistics (3PL) providers, e-commerce, retail businesses, and manufacturing companies. Industrial and logistics space absorption saw a nearly 25% year-on-year growth in 2024, a trend expected to continue in 2025.

However, challenges such as an unfavorable intermodal mix, supply chain inefficiencies, and rising costs persist. Government initiatives like PM Gati Shakti and the National Logistics Policy are expected to alleviate these bottlenecks. The Union Budget 2025 has reinforced this commitment by prioritizing infrastructure development, enhancing public-private partnerships, and facilitating better project planning through improved data access.

Chennai, Mumbai, Pune, and the National Capital Region (NCR) remain the primary logistics hubs, with developers actively seeking land to establish new warehouses and fulfillment centers. Multi-modal logistics park projects under public-private partnerships are set to further reduce transportation costs.

6 Key Trends Shaping the Sector in 2025

1. Adoption of Digital Simulation & Digital Twins
   The logistics industry is set to embrace ‘digital twins’—virtual models of warehouses that simulate real-time physical operations. This innovation will optimize warehouse efficiency, enhance inventory management, and streamline supply chains.
2. Last-Mile & Quick Commerce Growth
   The rapid expansion of quick commerce (Q-commerce) platforms is reshaping urban logistics, leading to a rising demand for in-city distribution centers. With intense competition in the sector, companies are expected to invest in AI-driven personalization, automated warehousing, and faster delivery solutions.
3. Expansion of Cold Chain Infrastructure
   Growing organized retail, quick service restaurants (QSRs), rising food consumption, and advancements in the pharmaceutical sector are accelerating the need for robust cold chain logistics. Companies like Snowman, ColdStar, and Coldman are expanding Grade A cold storage facilities across major metros and tier-2 cities.
4. Technology Integration: IoT, Robotics & Blockchain
   Logistics firms are rapidly integrating Internet of Things (IoT) for real-time shipment tracking, robotics for inventory management, and blockchain for secure, efficient warehouse operations. These advancements will significantly improve operational efficiency and security in logistics.
5. Sustainability Initiatives Gain Momentum
   The logistics industry is increasingly adopting sustainable practices, including renewable energy for warehouses, electric vehicle fleets for last-mile deliveries, and circular economy initiatives. Companies are expected to intensify efforts to reduce carbon footprints and optimize packaging solutions.
6. Workforce Development & Diversity Initiatives
   Skill development remains a key focus, with the government planning to establish five National Centres of Excellence for specialized training in supply chain management and logistics technology. Additionally, the industry is making strides in workforce diversity, promoting greater inclusion across various roles in the supply chain.

A Transformative Year Ahead

With robust policy backing, heightened investments, and accelerating technological adoption, India’s logistics and warehousing sector is on the brink of a major transformation in 2025. Companies that prioritize tech-enabled solutions, sustainability, and workforce development will gain a competitive edge in this evolving landscape.

Also Read: Lodha Industrial and Logistics Park

The post Indian Logistics & Warehousing: 6 Key Trends to Watch in 2025 appeared first on Square Feat India.

The report identifies e-commerce, third-party logistics (3PL), and omni-channel retail as primary drivers behind this warehousing boom. Notably, while Tier I cities have traditionally led the sector, Tier II and III cities are now emerging as key growth areas, with warehouse space absorption in these markets increasing by 41% from 2022 to 2023.

“Warehousing absorption in Tier II and III cities reached 16.4 million sq. ft in 2023, indicating a significant shift in the geographical distribution of logistics infrastructure,” said Sanjay Bajaj, Senior Managing Director of Logistics & Industrial at JLL India. The report also highlights the growing need for urban fulfillment centers, estimating that the combined space requirement for these centers will exceed 35 million sq. ft across India by 2027, driven by the demand for efficient last-mile delivery solutions.

As the sector evolves, sustainability is becoming increasingly important, with many developers adopting Environmental, Social, and Governance (ESG) standards in their projects. The National Logistics Policy, aimed at reducing logistics costs to 10% of GDP, is also creating a more favorable environment for organized warehouse development.

This strategic shift positions India as a key player in the global warehouse automation market, projected to reach $2 billion annually by 2026. With these developments, the Indian warehousing sector is set to play a pivotal role in the country’s economic growth and supply chain transformation.

Also Read: Industrial & Warehousing Demand Sees Robust Growth in 2024, Surpassing 20 Million Sq Ft of Leasing

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The new facility in Gujarat is expected to enhance Interarch’s production capacity, enabling the company to better serve its discerning customers. This move underscores Interarch’s commitment to strengthening its supply chain capabilities in Western India, a region that is emerging as a hub for new-age industries such as semiconductors, data centers, and renewable energy.

Interarch has a proven track record in Gujarat, having successfully executed large projects for notable clients including Asian Paints, Timken, Micron (through Tata Projects Limited), Asahi Glass, and MG Motors.

Arvind Nanda, Managing Director of Interarch Building Products Ltd., commented on the acquisition, stating, “This land acquisition in Gujarat is a significant milestone for us as we continue to expand our operational base across India. With this investment, we aim to boost our production capabilities and cater to the rising demand for high-quality pre-engineered building solutions in key markets. Our endeavor has always been to provide customer delight, and this is a significant step in that direction.”

Interarch currently operates four fully integrated manufacturing facilities located in Athivaram (Andhra Pradesh), Sriperumbudur (Tamil Nadu), and Pantnagar and Kichha (Uttarakhand). The new facility in Gujarat will further enhance the company’s ability to meet market demands effectively.

Also Read: India Ranks 3rd in Global Cross-Border Capital Destinations for Land and Development Sites

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