India’s Industrial and Warehousing Sector Grows 17% in 2024: Colliers

New Delhi / October 16, 2024: India’s industrial and warehousing sector saw significant growth in 2024, with leasing activity reaching 20.2 million sq ft from January to September, marking a 17% year-on-year increase across the top five cities. The quarterly average space uptake rose from 5.7 million sq ft in 2021 to 6.7 million sq ft in 2024, indicating steady growth, Colliers India said in a press statement. 

Delhi NCR and Chennai led the way, accounting for 53% of total leasing during the period. Third-Party Logistics (3PL) players dominated demand with a 35% share, while the Engineering and FMCG sectors also contributed significantly. Key micro-markets like Bhiwandi in Mumbai recorded 3.7 million sq ft of leasing, followed by Oragadam in Chennai and Chakan-Talegaon in Pune, both exceeding 2.0 million sq ft.

“On a quarterly basis, Q3 2024 saw about 7.3 mn sq ft of industrial & warehousing demand across the top five cities, an 18% rise YoY. With 2.3 mn sq ft of leasing and about one-third share, Delhi NCR continued to drive quarterly demand. The demand in the region was led by large uptake of industrial and warehousing space in Bhaproda and Kulana micro markets. Across the top five cities, 3PL firms accounted for the bulk of quarterly demand led by Mumbai and Chennai. Notably, engineering firms accounted for about 26% share in overall demand during the third quarter, with large take up of space in Chennai and Delhi NCR. Moreover, with increased demand for quality Grade A spaces replete with sustainable and technologically advanced features, leasing momentum by such firms is likely to continue over the next few years” says Vijay Ganesh, Managing Director, Industrial & Logistics Services, Colliers India.

From January to September 2024, Third-Party Logistics (3PL) players dominated India’s industrial and warehousing demand, accounting for 35% of overall leasing. However, the Engineering and FMCG sectors also played a significant role, contributing 32% to total demand during this period. With the upcoming festive season, space uptake from these sectors is expected to stay strong, the statement added. 

The rise of quick commerce (Q-commerce) players is anticipated to drive demand for larger hub-warehouses in major urban centres. Additionally, the electronics segment experienced a surge, with leasing activity doubling in the first three quarters of 2024 compared to the same period in 2023, the statement added.

“Taking cognizance of healthy demand across major cities and supportive government policies, 2024 can potentially close with record leasing activity to the tune of 25-30 mn sq ft. Improving logistics efficiencies, capacity augmentation and enhanced credibility of India as a global manufacturing hub will keep the growth momentum steady in the industrial and warehousing sector.” says Vimal Nadar, Senior Director & Head of Research, Colliers India.

Led by healthy leasing activity and improved developer confidence, the Jan-Sept 2024 period saw supply infusion of 21.6 mn sq ft, a 29% rise YoY. With about 7.6 mn sq ft of new industrial and warehousing developments, Delhi NCR alone accounted for about 35% share in overall completions during the nine-month period. Even on a quarterly basis, new supply remained healthy in Q3 2024, with about 7.2 mn sq ft of completions across top five cities of the country. Amidst favorable demand-supply dynamics, overall vacancy levels at the end of Q3 2024 remained stable at around 12-13%.

During the first nine months of 2024, large deals accounted for about 40% of the overall demand. Although a vast majority of these larger deals came from 3PL players, Engineering and FMCG segments also saw considerable large-sized deals. At the city level, industrial and warehousing space uptake in Delhi NCR was also driven by large sized deals, a marked deviation from 2023, wherein leasing activity was dominated by small sized deals. Almost 50% of the deals in the first nine months of 2024 were large sized in Delhi NCR, the statement added.