Synopsis
Warehousing transactions in India's eight key markets reached 56.4 million square feet in 2024, marking a 12% YoY increase. Mumbai leads the sector with 10.3 million square feet transacted. The manufacturing sector continues to drive demand, while overall vacancy stands at 11.5%. Investments surged by 136% to USD 1,877 million.Key Takeaways
- Warehousing transaction volume grew by 12% YoY in 2024.
- Mumbai recorded 10.3 mn sq ft in transactions.
- Manufacturing sector contributed 39% of demand.
- Vacancy rates were at 11.5%.
- Investments in warehousing surged 136% to USD 1,877 mn.
Mumbai, March 12, (NationPress) The volume of warehousing transactions across India's eight major markets hit 56.4 million square feet (mn sq ft) in 2024, marking a 12% year-on-year (YoY) rise from 50.3 mn sq ft in 2023, as per a report by the real estate consultancy Knight Frank India released on Wednesday.
The report highlights that these markets possess an extra capacity of 233 mn sq ft in the form of unused land, approximately four times the transaction volume recorded in 2024, which could sufficiently address future demand.
Despite an increase in average rents, the vacancy rate stood at 11.5% in 2024, which has kept rental growth in check. Around 62% of transactions occurred in Grade A space, totaling 34.71 mn sq ft in 2024, with the manufacturing sector leading the way, accounting for 39% of overall demand.
Mumbai emerged as the top warehousing market, with transaction volumes reaching 10.3 mn sq ft in 2024. The third-party logistics (3PL) sector was the primary contributor in Mumbai, representing 43% of the area transacted. The National Capital Region (NCR) followed, making up 16% of the total area transacted, with the 3PL and manufacturing sectors accounting for 38% and 24% of the market, respectively. Other markets like Bengaluru, Kolkata, Ahmedabad, and Chennai experienced substantial growth in transaction volumes, ranging between 25-29% YoY, according to the report.
In Chennai, Bengaluru, and Ahmedabad, companies from the manufacturing sector were the main drivers of growth, while large spaces occupied by 3PL and e-commerce firms represented a significant portion of Kolkata’s tenant base during the year.
The manufacturing sector (excluding FMCG and FMCD) continued to gain traction, contributing the bulk of the growth throughout the year. It accounted for 39% of total volumes with 22 mn sq ft of warehousing transactions in 2024, reflecting an 18% YoY growth in the area leased during this period, as stated in the report.
Shishir Baijal, CMD of Knight Frank India, remarked, "Occupier demand has remained robust in 2024, fueled by the ongoing expansion of the manufacturing sector. The positive market momentum and increasing average rents indicate that occupiers are able to secure favorable terms while scaling their operations. Despite various challenges, India's warehousing sector continues to attract substantial institutional interest, solidifying its status as a resilient and high-growth asset class. As the sector evolves, it presents significant growth opportunities, positioning India as a key player in the global logistics and warehousing landscape."
The warehousing industry experienced an impressive surge in investments in 2024, with total private equity investments reaching USD 1,877 mn, marking a notable increase of 136% from USD 684 mn in 2023. This growth underscores the heightened interest in the warehousing sector, primarily driven by the robust expansion of manufacturing, 3PL, and e-commerce facilities, all capitalizing on the rise of online retail and supply chain optimization, the report concluded.
