India's Grade A warehousing market is experiencing unprecedented growth, as highlighted by a joint report from CREDAI and CRE Matrix. The leasing of premium warehousing spaces is expected to exceed 45 million sq. ft in 2024, reflecting the strong momentum in India's logistics and industrial sectors. The report reveals that the first half of 2024 alone recorded 20.3 million sq. ft in leasing activity, with projections indicating that the second half will add more than 25 million sq. ft.

This surge in demand has led to the lowest vacancy rate ever recorded at just 8.2%, underlining the rapid expansion of the market. In the first half of 2024, demand surpassed the new supply of 14.8 million sq. ft, showcasing the strength of the logistics sector and the growing need for more Grade A warehousing spaces. The demand is especially concentrated in key regions such as the Mumbai Metropolitan Region (MMR), Pune, and the National Capital Region (NCR), which collectively account for 64% of the total demand for warehousing spaces in India.

President of CREDAI, Mr. Boman Irani, highlighted that the growth in India's property market has evolved, with specialized segments like warehousing now playing a complementary role alongside traditional sectors like residential and commercial real estate. The rapid development of India's supply chain, driven by e-commerce, manufacturing expansion, and the increasing focus on logistics infrastructure, is helping the warehousing sector experience sustained growth.

As we move into the fourth quarter of 2024, demand is expected to remain strong, supported by new manufacturing units and a rising e-commerce sector, particularly in tier-I and tier-II cities. Co-founder and CEO of CRE Matrix, Mr. Abhishek Kiran Gupta, noted India’s unique position in the global market, where manufacturers are shifting their operations from China or expanding into India due to the country’s competitive advantages, such as low wages, technological advancements in manufacturing, and an improved ease of doing business. These factors are expected to drive the warehousing market toward a total stock of 300 million sq. ft by the end of 2025.

The report also highlights some key regional trends. Bengaluru saw a 25% increase in Grade A warehousing supply between the first and second quarters of 2024, marking the first significant rise in the city. On the other hand, Pune demonstrated exceptionally high demand for Grade A spaces, accounting for 48% of the total demand in the MMR-Pune region during the first half of the year. However, despite this strong demand, Pune is facing a supply shortage, with a demand-to-supply ratio of 2x, indicating significant potential for new development in the coming quarters.

As the warehousing sector continues to evolve, the integration of technology, improved infrastructure, and government initiatives are expected to further propel growth. The logistics real estate sector is becoming a vital component of India's overall economic development, reflecting the country's growing importance as a global manufacturing and logistics hub.

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