India's logistics and industrial sector demonstrated significant growth during the first half of 2024, reflecting its resilience and importance in the current market environment, as highlighted by a report from real estate consultancy JLL.The report noted substantial year-on-year increases in rents across major cities such as Mumbai, Delhi NCR, Bengaluru, Kolkata, Chennai, Hyderabad, Ahmedabad, and Pune. Specifically, rents for Grade A properties rose by 4.8%, while Grade B properties experienced an even larger increase of 6.4%. This upward trend in rents indicates strong demand for warehousing and light manufacturing leases nationwide.

Vacancy rates during this period further underscored the sector's positive trajectory. Grade A properties had a vacancy rate of 6.6%, while Grade B properties recorded a higher vacancy rate of 15.4%. The overall gross absorption in the top eight cities amounted to approximately 24.2 million square feet, with Grade A properties contributing 70% of this total and Grade B properties accounting for the remaining 30%.

JLL's findings also revealed that the total supply of industrial properties in India now stands at 393 million square feet, with expectations to reach approximately 595 million square feet by 2027, indicating strong growth potential in the sector. Organized Grade A warehousing currently accounts for 204 million square feet, outpacing the 189 million square feet of Grade B supply. This shift signals a growing preference among tenants for modern, efficient spaces that meet the demands of today’s logistics operations, including ESG compliance and automation needs.

Yogesh Shevade, Head of Logistics & Industrial, India at JLL, remarked, "The expansion of Grade A warehousing reflects a clear preference for spaces that align with the advanced requirements of current logistics operations".

The report also identified the third-party logistics (3PL) sector as the largest driver of demand, responsible for 38% of gross absorption. This was followed by the auto and engineering sector at 23%, with the FMCG, FMCD, and retail sectors collectively contributing 20%. Key transactions during this period spanned across these sectors, highlighting broad-based demand for logistics and industrial spaces.

Several factors are driving the growth of India's warehousing sector, including the rise of quick commerce, the National Logistics Policy, the expansion of e-commerce into Tier I and II/III cities, and the increased outsourcing of warehouse space to 3PL providers. Additionally, there is a growing emphasis on ESG considerations, with sustainability practices increasingly being integrated into both the construction and operation of logistics facilities.