Knight Frank India reported that warehousing transaction volumes in India’s eight primary markets reached 56.4 million square feet (mn sq ft) in 2024, a 12% year-on-year (YoY) increase from 50.3 mn sq ft in 2023. Further, the report notes that these markets have an additional capacity of building 233 mn sq ft, roughly four times the 2024 transaction volume, in form of unutilised land, which could be sufficient to meet future demand. While average rents have risen, vacancy was noted at 11.5% in 2024, thus keeping rental growth restrained. Estimated 62% of transactions were in Grade A space at 34.71 mn sq ft in 2024. While manufacturing was the most prominent sector comprising of 39% of all demand.
Mumbai emerged as the leading warehousing market with the transaction volumes of 10.3 mn sq ft in 2024. The 3PL industry was the primary driver in Mumbai and constituted 43% of the area transacted in this market. The NCR was the second most prolific market accounting for 16% of the total area transacted during the period with the 3PL and manufacturing sectors accounting for 38% and 24% of the market respectively. The markets of Bengaluru, Kolkata, Ahmedabad and Chennai experienced very healthy growth in transaction volumes ranging between 25-29% YoY. Manufacturing sector companies were the primary growth drivers in Chennai, Bengaluru and Ahmedabad, while the large spaces taken up by 3PL and Ecommerce players constituted a significant part of Kolkata’s occupier base during the year.
Manufacturing sector (excluding FMCG and FMCD) continued to gain momentum and contributed majority of the growth during the year. It accounted for 39% of the total volumes with 22 mn sq ft of warehousing transactions in 2024, translating to an 18% YoY growth in the area leased by it during the period.
Shishir Baijal, Chairman & Managing Director, Knight Frank India said, “Occupier demand has remained strong in 2024, driven by the manufacturing sector’s continued expansion. Positive market momentum and rising average rents reflect occupiers’ ability to secure favourable terms while scaling operations. Despite challenges, India’s warehousing sector continues to attract significant institutional interest, reinforcing its position as a resilient and high-growth asset class. As the sector evolves and adapts, it offers significant growth potential, positioning India as a key player in the global logistics and warehousing landscape.”
The warehousing sector witnessed a remarkable surge in investments in 2024, with total PE investments reaching USD 1,877 mn, a significant increase of 136% from USD 684 mn in 2023. This growth highlights the growing interest in the warehousing segment, driven primarily by the robust expansion of manufacturing, 3PL and Ecommerce facilities, all of which are capitalising on the rise of online retail and supply chain optimisation.
The Indian warehousing market has expanded beyond primary hubs, as businesses seek to leverage the country’s vast hinterland consumer base. These emerging markets are still developing, with a growing presence of warehousing properties. Secondary markets have also seen a healthy 6% YoY, with 11.4 mn sq ft transacted in 2024. Lucknow contributed the largest share of this growth.
TOTAL WAREHOUSING TRANSACTIONS ACROSS THE 8 PRIMARY MARKETS
While the market fundamentals have undergone a significant shift, the overall market volumes have also grown in 2024 as the Indian warehousing market continued to evolve and grow during the period. Occupier demand surged by 12% YoY to 56 mn sq ft for the eight primary markets (Mumbai, NCR, Bengaluru, Chennai, Hyderabad, Pune, Kolkata and Ahmedabad) during the year. Grade A properties continued to attract occupier attention with a 62% share of the volume transacted in 2024 compared to 57% in 2023.
WAREHOUSING RENT
Knight Frank’s report stated Pune as the highest warehousing rental market across primary markets in the country. The rent is recorded at INR 26.6/ sq ft/ month. Mumbai and Kolkata recorded rental growth of 4% each. Rent growth has been modest in recent years period as occupiers negotiate better terms owing to the expansion of their warehousing footprint in the wake of available supply potential.
Manufacturing: To continue fuelling the Indian warehousing market over the medium term
The demand profile of the market in 2024 remained similar to that seen in the base period of 2023 with the Manufacturing sector (excluding FMCG and FMCD) continuing to gain momentum and driving most of the growth during the year. Manufacturing industry accounted for 39% of the total volumes with the 22 mn sq ft transaction volumes in 2024, translating to an 18% YoY growth in the area leased by it during the period.
Companies in the manufacturing sector such as those in the automotive, energy, and chemicals industries, accounted for this significant percentage of transaction volume during the period. With the ongoing decentralization of manufacturing capacity from China, India has seen substantial benefits.
Third-Party Logistics: Despite moderation in transaction volumes in 2024, 3PL sector expected to anchor the market in 2025
Following the manufacturing sector, companies in the 3PL (third-party logistics) sector accounted for a 30% share of the area transacted. The 16.7 mn sq ft was taken up by 3PL operators was 9% lower in YoY terms as occupiers seemingly chose to take up longer term commitments with warehouse developers during the year.
Ecommerce: Shown signs of recovery
While still at 9%, the steep increase in the Ecommerce sector’s share from 5% in 2023 is an encouraging sign for the warehousing market. Since early 2022, the e-commerce sector volumes have remained stagnant due to surplus capacities created with the aggressive expansion during the pandemic. Additionally, major players in the sector have acquired large-format, captive-owned spaces for their regional hubs, which are not reflected in market demand as they are not part of the leasable space market. However, with increasing land and other development costs, occupiers are increasingly looking to shift back to the lease market which enables them to charge their real estate expenses to the P&L and not lock capital in non-core investments.
SECONDARY MARKET DEMAND SURGES
Going beyond the top eight primary Indian markets, the Knight Frank’s report also delves into the performance of warehousing transaction volumes of 13 secondary markets. Driven by the robust performance of primary markets, secondary markets also witnessed a healthy 6% YoY growth, with 11.4 mn sq ft transacted in 2024 which when compared to 2023 was 10.74 mn sq ft. Ambala-Rajpura and Surat belt were the key drivers of this growth, each registering a remarkable 98% YoY increase from 0.88 mn sq ft in 2023 to 1.74 mn sq ft in 2024 and 0.80mn sq ft in 2023 to 1.57mn sq ft in 2024 respectively. Along with Lucknow, these markets accounted for 45% of the total transacted area in secondary markets. The demand for Grade A properties strengthened, comprising 53% of the total transacted area, up from 43% in 2023.
