Mumbai: Warehousing transaction volumes in India’s eight primary markets reached 56.4 million square feet in 2024, a 12 per cent year-on-year (YoY) increase from 50.3 million sq ft in 2023, according to a report by real estate consultancy Knight Frank India released in March.

Further, the report notes that these markets have an additional capacity of building 233 mn sq ft, roughly four times the 2024 transaction volume, in the form of unutilised land, which could be sufficient to meet future demand.

While average rents have risen, vacancy was noted at 11.5 per cent in 2024, thus keeping rental growth restrained. An estimated 62 per cent of transactions were in Grade A space at 34.71 million sq ft in 2024 while manufacturing was the most prominent sector, comprising 39 per cent of all demand.

Mumbai emerged as the leading warehousing market with transaction volumes of 10.3 mn sq ft in 2024. The third party logistics (3PL) industry was the primary driver in Mumbai and constituted 43 per cent of the area transacted in this market. The NCR was the second most prolific market, accounting for 16 per cent of the total area transacted during the period, with the 3PL and manufacturing sectors accounting for 38 per cent and 24 per cent of the market, respectively. The markets of Bengaluru, Kolkata, Ahmedabad and Chennai experienced very healthy growth in transaction volumes ranging between 25-29 per cent YoY, according to the report.

Manufacturing sector companies were the primary growth drivers in Chennai, Bengaluru and Ahmedabad, while the large spaces taken up by 3PL and e-commerce players constituted a significant part of Kolkata’s occupier base during the year.

The manufacturing sector (excluding FMCG and FMCD) continued to gain momentum and contributed the majority of the growth during the year. It accounted for 39 per cent of the total volumes with 22 million sq ft of warehousing transactions in 2024, translating to an 18 per cent YoY growth in the area leased by it during the period, the report states.

Knight Frank India CMD Shishir Baijal said, “Occupier demand has remained strong in 2024, driven by the manufacturing sector’s continued expansion. Positive market momentum and rising average rents reflect occupiers’ ability to secure favourable terms while scaling operations. Despite challenges, India’s warehousing sector continues to attract significant institutional interest, reinforcing its position as a resilient and high-growth asset class. As the sector evolves and adapts, it offers significant growth potential, positioning India as a key player in the global logistics and warehousing landscape.”

The warehousing sector witnessed a remarkable surge in investments in 2024, with total PE investments reaching USD 1,877 million, a significant increase of 136 per cent from USD 684 million in 2023. This growth highlights the growing interest in the warehousing segment, driven primarily by the robust expansion of manufacturing, 3PL and e-commerce facilities, all of which are capitalising on the rise of online retail and supply chain optimisation, the report added.