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Industrial & Warehousing Sector in India Records 30% YoY Growth in Absorption

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The industrial and warehousing sector in India achieved unprecedented growth in 2024, with total absorption surging by 30% year-on-year (YoY) to a historic high of 64.5 million sq. ft. Fresh supply also saw a notable 15.8% YoY increase, reaching 71.8 million sq. ft.

Key Drivers of Growth

This remarkable expansion was fueled by robust demand from third-party logistics (3PL) providers and the manufacturing sector. Additionally, there was a significant uptick in interest from the fast-moving consumer goods (FMCG), fast-moving consumer durables (FMCD), and e-commerce industries. Tier-I cities played a dominant role, accounting for 77% of total absorption, while Tier-II and Tier-III cities contributed the remaining 23%.

On the supply side, Tier-I cities delivered 56.8 million sq. ft. (79%), whereas Tier-II and Tier-III cities added 15 million sq. ft. (21%). This strong supply pipeline highlights the sector's alignment with growing market demand.

Rising Demand for Grade-A Spaces

Over the past few years, there has been a notable shift towards Grade-A compliant spaces, driven by occupier preferences and adherence to ESG (Environmental, Social, and Governance) standards. In 2024, the share of Grade-A supply increased to 55%, up from 53% in 2023.

Sector-Wise Breakdown

  • 3PL Sector: Led absorption with 33% of total demand.
  • Manufacturing: Accounted for 22% of total absorption.
  • FMCG & FMCD: Witnessed a substantial rise, contributing 16% in 2024, compared to just 6% in 2023.
  • E-commerce: Strengthened its presence, with absorption increasing to 10% in 2024 from 4% in 2023, particularly in Tier-II and Tier-III cities such as Coimbatore, Lucknow, Patna, Guwahati, and Indore.

Delhi-NCR Leads the Market

Delhi-NCR emerged as the top performer, contributing nearly 10 million sq. ft. in absorption and adding over 13 million sq. ft. of fresh supply. It was followed by Bengaluru and Mumbai as key demand centers. In terms of total supply, Delhi-NCR accounted for 19%, followed by Mumbai and Bengaluru with 13% each.

Future Outlook

The industrial and warehousing sector is poised for further expansion in 2025. "We anticipate continued growth driven by increasing demand from the manufacturing sector and the rising importance of Tier-II and Tier-III cities as strategic hubs for sourcing, consumption, and distribution. Both supply and absorption are expected to surpass 75 million sq. ft. across India in 2025."

For more details, read the full report on The Hindu Business Line.