In 2024, India witnessed a landmark achievement in its industrial and logistics leasing sector, with a total of 39.5 million sq. ft. leased across the country. This marked a record high for the industry, driven by a robust supply of 38.6 million sq. ft. during the same year. Key cities like Delhi-NCR, Bengaluru, and Kolkata were the major contributors, collectively accounting for nearly 60% of the leasing activity.

Key Factors Driving Growth in Industrial & Logistics Leasing

The industrial and logistics leasing sector in India has been showing considerable resilience, supported by the growth of third-party logistics (3PL) providers, which were responsible for 41% of the leasing activity in 2024. These 3PL providers have been instrumental in fulfilling the growing demand for warehousing and logistics services, especially with the rise of e-commerce and quick-commerce sectors. Engineering and manufacturing (E&M) firms accounted for an additional 18% of leasing activity, indicating strong demand from industries tied to India’s manufacturing ecosystem.

The leasing activity also saw a significant portion driven by small-sized transactions under 50,000 sq. ft., which made up 43% of the total volume. This reflects a growing demand for smaller warehousing spaces to cater to the last-mile delivery needs of e-commerce and quick-commerce businesses. The trend of smaller, decentralized warehouses is expected to continue in the coming years, as businesses seek proximity to urban centers to meet the rapid delivery demands of today’s consumers.

Strong Demand in 2024 Driven by E-Commerce and Quick-Commerce Operators

The second half of 2024 saw a 17% YoY growth in leasing activity, driven primarily by demand from e-commerce companies, quick-commerce operators, and third-party logistics providers. The need for modern warehouses capable of supporting fast, efficient supply chain operations has surged, particularly with the continued expansion of the e-commerce sector. Quick-commerce companies, which emphasize ultra-fast delivery times, have also become a significant force in shaping India’s logistics landscape.

In addition to e-commerce, the FMCG (fast-moving consumer goods) sector also played a key role in the surge of leasing activity. As consumer demand grows, especially in urban and peri-urban regions, the warehousing infrastructure required to meet these needs is becoming more sophisticated and expansive.

Looking Ahead: 2025 and Beyond

Looking into 2025, the demand for warehousing and logistics spaces is expected to remain strong, with a focus on in-city warehousing and expansion driven by quick-commerce concepts. These concepts, which require warehouses to be located closer to end-consumers, are expected to dominate the logistics sector in urban areas. Tier-II cities such as Chandigarh, Hosur, and Jaipur are anticipated to emerge as key focal points for warehousing expansion, thanks to the growth of regional e-commerce and FMCG businesses.

While the supply of industrial and logistics spaces is projected to remain steady in the coming year, major cities like Chennai, Mumbai, and Bengaluru are likely to continue driving the bulk of new supply additions. Developers and investors are expected to remain active in both Tier-I and Tier-II cities, as the demand for quality warehousing spaces grows across the country.

Government Support and Future Outlook

The growth of the industrial and logistics sector is further bolstered by various government initiatives that support India’s manufacturing ecosystem, as well as the expansion of infrastructure in cities and regions with high logistics demand. Government schemes aimed at boosting the manufacturing sector, combined with the rise of consumer demand, are expected to positively impact the FMCG, retail, and e-commerce sectors, which are all major drivers of logistics leasing.

With the continued rise of e-commerce and quick-commerce, as well as the expansion of Tier-II cities, India’s logistics infrastructure is set to become increasingly sophisticated. The future of industrial and logistics leasing in India appears bright, with demand expected to remain strong and investors continuing to explore opportunities in the sector.

For more insights on the growth of India’s logistics sector, real estate trends, and industrial leasing opportunities, explore our articles on business and investment trends.

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