India's Logistics and Industrial Sector Sees Robust Growth in H1 2024

India's logistics and industrial sector exhibited strong growth in the first half of 2024, underscoring its resilience and continued relevance in the current market landscape, according to a report by real estate consultancy firm JLL.

The report highlighted significant year-on-year rent increases across major cities, including Mumbai, Delhi NCR, Bengaluru, Kolkata, Chennai, Hyderabad, Ahmedabad, and Pune. Grade A properties witnessed a 4.8% increase in rents, while Grade B properties saw an even higher rise of 6.4%. This surge in rents signals robust demand for warehousing and light manufacturing leases across the country.

The vacancy rates during this period also painted a positive picture for the sector. Grade A properties reported a vacancy rate of 6.6%, while Grade B properties had a higher vacancy rate of 15.4%. The gross absorption across the top eight cities reached approximately 24.2 million square feet, with Grade A properties contributing 70% of the total and Grade B properties making up the remaining 30%.

JLL noted that the total supply of industrial properties in India now stands at 393 million square feet, with projections to reach around 595 million square feet by 2027. This highlights the sector’s robust growth potential. Within this supply, organized Grade A warehousing accounted for 204 million square feet, surpassing the 189 million square feet of Grade B supply. This shift reflects a growing preference among tenants for future-ready spaces that enhance warehouse efficiency, ESG compliance, and automation needs.

Yogesh Shevade, Head of Logistics & Industrial, India at JLL, stated, "The increase in Grade A warehousing supply indicates a strong preference for spaces that can meet the demands of modern logistics operations".

The report further revealed that the third-party logistics (3PL) sector remains the largest demand driver, contributing 38% of gross absorption. This is followed by the auto and engineering sector at 23%, and the FMCG, FMCD, and retail sectors, which collectively account for 20%. Key transactions during this period spanned across these sectors, reflecting the broad-based demand for industrial and logistics spaces.

The growth of the warehousing sector is being driven by factors such as the rise of quick commerce, the National Logistics Policy, increased e-commerce penetration into Tier I and II/III cities, and the outsourcing of warehouse space to 3PL providers. Additionally, the industry is placing greater emphasis on ESG considerations, with sustainability practices increasingly being integrated into both construction and operations.