The Logistics & Industrial (L&I) real estate sector in India is witnessing an unprecedented surge, with leasing volumes projected to surpass 50 million square feet (MSF) in 2024. According to data from Cushman & Wakefield, this growth marks the third consecutive year of such strong demand, bolstered by sectors like engineering & manufacturing (E&M), retail, and third-party logistics (3PL) operators. As of October 2024, leasing volumes had already surpassed 41 MSF, with cities like Pune, Chennai, and Bengaluru continuing to lead the charge in leasing activity. These cities have consistently demonstrated high demand, driven by booming e-commerce, retail, and industrial sectors.
Looking ahead, experts predict that the L&I market will diversify in 2025, driven by rising land prices and construction costs. A significant rise in land prices over the last two years has pushed demand for L&I spaces to new corridors in India’s periphery. Notably, in key areas like Farukhnagar in Haryana and Chakan in Pune, land prices have seen a steep increase, forcing developers and landlords to reconsider prime locations. In fact, prices have risen by 25% in key industrial hubs like Chakan and Bhiwandi in Maharashtra, further pushing the leasing market towards less expensive peripheral locations. This trend, experts say, will continue into 2025, with developers actively exploring these alternate corridors.
Key to this growth is the Production-Linked Incentive (PLI) scheme, which has incentivised industrial development since its introduction in 2020. The strong growth of the E&M and retail sectors, along with the continued expansion of 3PL, has driven demand for logistics and warehousing spaces. According to Abhishek Bhutani, MD of L&I at Cushman & Wakefield, the demand for logistics and industrial spaces in India will remain robust, especially with an expected 25 MSF of Grade-A warehousing supply hitting the market over the next two to three years. This will predominantly be focused in West and South India, including Mumbai, Pune, Chennai, and Bengaluru.
From a sustainability perspective, the expansion of the L&I sector is expected to play a pivotal role in shaping urban development. With land becoming increasingly scarce in established industrial hubs, shifting demand to more affordable and accessible peripheral locations can help alleviate congestion and balance urban growth. This decentralisation can contribute to more sustainable urban planning by ensuring better utilisation of available land and resources. However, it also underscores the need for effective governance and infrastructure planning to support these emerging corridors in a way that promotes sustainable growth for both industries and local communities. As the sector continues to evolve, it is crucial for stakeholders to consider not just economic growth but also the long-term sustainability of these emerging industrial zones.
