India's industrial & logistics space take-up surpasses 39 mn sq ft

Annual rental growth across cities. (Increased land costs and limited availability of quality space drove YoY rental growth in key micro-markets.)

India's industrial & logistics space take-up has exceeded 39 million sq ft in 2024. This was driven by a revival in demand from leading e-commerce companies, the expansion of quick-commerce operators, and the aggressive growth initiatives by third-party logistics (3PL) and fast-moving consumer goods (FMCG) players, according to a January 2025 CBRE report.

Driven by the premiums commanded by newly introduced modern warehouses, constrained availability of high-quality space in select locations and rising land costs, quoted rental values increased year-on-year (Y-o-Y) in key micro-markets across major cities.

Supply
On the supply side, robust leasing activity and continued expansion by institutional-backed developers resulted in a 7 percent Y-o-Y increase in total I&L development completions in CY2024, reaching 38.6 million sq. ft. During the second half of 2024, supply expanded by 12 percent on an annualised basis, reaching 20.3 million sq. ft.

Mumbai, Chennai, and Bengaluru emerged as key contributors to this growth, collectively accounting for over half of the total supply addition in both H2 2024 and the entire year.

Demand
On the demand side, despite a moderate slowdown in the first half of the year, overall leasing activity in the I&L sector surpassed the previous year's record, exceeding 39 million sq. ft. in 2024.

Space absorption remained strong particularly in the second half of the year, experiencing a robust 17 percent Y-o-Y growth. This was driven by a revival in demand from leading e-commerce companies, the expansion by quick-commerce operators aimed at enhancing customer service and minimising lead times, and the aggressive growth initiatives by third-party logistics (3PL) and fast-moving consumer goods (FMCG) players.

Delhi-NCR, Bengaluru, and Kolkata accounted for almost 60 percent of the leasing activity during the year and in H2 2024. Additionally, these three cities registered an expansion in space take-up during July-December 2024 compared to last year.

Sectoral divide
Third-party logistics (3PL) providers continued to dominate the leasing activity, holding a share of -47 percent in CY2024, a marginal decrease from 44 percent in CY2023. Occupiers across various sectors, including e-commerce, retail, and manufacturing, are increasingly outsourcing their supply chain operations to 3PL companies to meet their storage requirements, gain greater flexibility, lower costs, and mitigate challenges in sourcing labour.

Driven by sustained growth in domestic consumer demand, both e-commerce and FMCG companies expanded their share of occupied space throughout 2024 and in the second half of the year compared to the corresponding period in 2023. Notably, e-commerce's share doubled from 5 percent in H2 2023 to 10 percent in H2 2024, while FMCG's share more than doubled from 4 to 9 percent over the same period.

Consistent with the trend observed throughout 2024, 3PL providers led the space absorption in H2 2024, accounting for a -42 percent share. E&M firms followed with 18 percent, while retail and e-commerce companies each contributed -10 percent.

Policy support
Throughout 2024, both central and state governments maintained a strong focus on promoting growth within India's industrial and logistics (I&L) sector. According to the report, this commitment was evidenced by a range of strategic policies, incentives, and specialised programmes implemented over the course of the year.

The report points out Chhattisgarh Industrial Development Policy 2024, Rajasthan Investment Promotion Scheme 2024, Tripura Industrial Investment Policy 2024 and Tripura Industrial Investment Policy, 2024.

“Various government-driven infrastructure initiatives, policy measures, such as the Production Linked Incentive (PLI) scheme and Make in India 2.0, have further bolstered the country's manufacturing ecosystem. This has attracted investments across the sector, leading to an increased demand for warehousing space from these companies,” it reads.