Mumbai leads India's warehousing growth as country sees record 44.9 msf absorption in 2024

According to data by Vestian, a real estate consultancy firm, the absorption in warehousing and logistics sector increased by 19% in 2024 over the previous year, thanks to the strong leasing activities in the second half of 2024.

India's warehousing and logistics sector witnessed a record 44.9 million square feet (msf) absorption in 2024, the highest in any calendar year.

Absorption refers to the amount of space, measured in square feet, that is taken up or leased by businesses.

According to data by Vestian, a real estate consultancy firm, the absorption in warehousing and logistics sector increased by 19 percent in 2024 over the previous year, thanks to the strong leasing activities in the second half of 2024.

The second half of 2024 alone witnessed 28.3 msf of absorption, a 70 percent jump, compared to H1 2024.

Mumbai reported the highest absorption of 18.6 msf in 2024 as it grew by 82 percent, compared to the previous year. Experts said that the significant rise in absorption could be attributed to improved intercity connectivity through the Navi Mumbai airport and the rise of quick commerce in major tier-1 cities.

Pune’s absorption increased by 85 percent, the highest rise among top seven cities, reporting 13 msf absorption in 2024.

Chennai, Hyderabad, and Kolkata accounted for 15 percent of the pan-India warehousing and logistics absorption during 2024, indicating a decline from 22 percent a year ago.

However, NCR registered the highest decline of 55 percent in absorption in 2024. As a result, the share of NCR in the pan-India absorption rate declined from 23 percent in 2023 to a mere 9 percent in 2024.  The share of warehouse leasing in Bengaluru reduced from 10 percent in 2023 to 6 percent in 2024.

Shrinivas Rao, CEO, Vestian, said that India’s position as a key logistics hub is set to strengthen on the back of positive investor sentiments and robust domestic demand.

“The government’s continued focus on mega infrastructure projects is expected to further propel growth in the warehousing and logistics sector. However, limited availability of skilled workforce, regulatory challenges, and land acquisition costs may pose a challenge,” he said.

The data highlighted that the majority of the absorption in 2024 was concentrated in 3PL (third party logistics) companies, accounting for 33 percent of country-wide absorption. However, the share has dropped from 44 percent a year earlier. The share of engineering and manufacturing sector increased from 18 percent in 2023 to 24 percent in 2024, the report observed.

Rentals

Chennai holds the highest rentals of Rs 24.2 per sq ft per month in 2024, registering an annual appreciation of 11 percent. Limited availability of land within the city peripheries pushed the rentals northwards.

However, Mumbai has emerged as the most affordable warehousing market in 2024, with an average rental of Rs 18.1 per sq ft per month. Average rentals depreciated by 3 percent in Pune to Rs 22.9 per sq ft per month.

 Investment

The warehousing and logistics sector received investments worth $1.96 billion, accounting for 29 percent of the total institutional investment garnered in the real estate sector in 2024.

Investment inflows surged to 203 percent year on year (YoY), driven by the growing demand for warehouses amid the rapid expansion of the quick commerce sector. In 2023, the institutional investment for warehousing and logistics sector was only $0.645 billion.

Ketan Kulkarni, Managing Director and CEO, Gati Express and Supply Chain Limited, said that Mumbai’s dynamic economic environment, coupled with world-class connectivity via rail, road, port, and air, as well as a strong industrial and manufacturing base, continues to make it a magnet for investments in the warehousing and logistics sector.

“Furthermore, the sector is expected to gain additional momentum from the rapid growth of e-commerce and quick commerce, along with upcoming infrastructure developments such as the Navi Mumbai International Airport and the expansion of the railway network,” he said.