India's third-party logistics (3PL) sector has emerged as the single largest occupier in the country's warehousing market, recording cumulative gross absorption exceeding 110 million sq. ft between 2021 and the first half of 2026, according to a report released on Wednesday, 19 August 2025 by global real estate consultancy JLL. The sector's dominance underscores a structural shift in how Indian industry is approaching logistics infrastructure.

Scale of 3PL Demand

The JLL report found that the 3PL sector maintained a consistent share of gross warehousing demand ranging between 28% and 42% across the review period. In H1 2026 alone, the sector absorbed 11.1 million sq. ft — reinforcing its position as what the report describes as 'one of the market's most consistent growth engines.'

Average deal sizes expanded by 25%, rising from 1 lakh sq. ft in 2021 to 1,25,000 sq. ft in 2025. This enlargement in transaction scale points to occupiers committing to larger, longer-horizon footprints rather than short-term leasing arrangements.

Grade A Warehousing on the Rise

Grade A facilities have steadily gained ground, lifting their share of total 3PL absorption from 50% in 2021 to 57% in 2025. Rents for Grade A space grew at a compound annual growth rate (CAGR) of 4.9%, reaching ₹23 per sq. ft in 2025. Overall 3PL facility rents rose at a 3.9% CAGR over the same period, settling at ₹21 per sq. ft.

The premium commanded by Grade A assets accelerated further in H1 2026, with rents climbing to ₹23.7 per sq. ft — a 7.7% year-on-year increase that outpaced broader market growth. According to the report, this widening rental differential reflects occupiers' willingness to absorb higher costs in exchange for enhanced operational capabilities, including automation readiness and technology integration.

What Industry Executives Said

Yogesh Shevade, Managing Director, Industrial & Logistics, India, JLL, said the 3PL sector 'consistently captures the highest share of gross warehousing demand, thus establishing itself as one of the market's most consistent growth engines.' He added that the 25% expansion in average deal sizes 'is not just about scale but it signals a long-term trajectory of growth and appetite for future-ready infrastructure.'

Shevade further noted: 'This is about India's manufacturing and logistics sector becoming globally competitive through strategic infrastructure investment that supports automation, sustainability, and technology integration.'

Broader Market Implications

The report highlights a pronounced shift toward institutional-grade warehousing infrastructure, reflecting the systematic prioritisation of operational efficiency and modern specifications. This comes amid India's broader push to position itself as a global manufacturing and supply chain hub, with policy tailwinds from production-linked incentive schemes and infrastructure investment programmes accelerating demand for high-quality logistics assets.

Notably, the acceleration in Grade A rental premiums in H1 2026 suggests that the gap between institutional and non-institutional warehousing will continue to widen — potentially squeezing out older, lower-specification facilities as occupiers upgrade their supply chain networks.

What to Watch

With deal sizes growing and Grade A penetration rising, the warehousing sector is expected to attract sustained institutional investment through the second half of 2026. The trajectory of 3PL demand will be closely watched as a leading indicator of India's broader manufacturing and consumption growth.