Logistics & Industrial (L&I) real estate leasing volume for 2024 is expected to close in the range of 50-53 mn. sq. ft. (MSF), making it the third consecutive year of 50+ MSF of leasing volume, according to a Cushman & Wakefield report.

As of October-2024 (YTD), the leasing volume has already surpassed 41 MSF across the top-8 real estate markets. Ever since the Production-Linked Incentive (PLI) scheme was introduced by the government in 2020, the industrial leasing volume witnessed healthy growth. Besides, the strong emergence of retail and e-commerce has led to intense activity in the warehousing space too.

For 2025, it is expected that the new-normal level of demand will sustain, given the widening of the consumption base in India alongside robust industrial activity witnessed in recent years. India is also a beneficiary of the China+1 diversification strategy followed by global manufacturing firms, says the report.

Surge in the engineering & manufacturing (E&M) sector growth, strengthening 3PL operators and retail industry are primary drivers of demand for L&I space in recent years. These factors are expected to continue to remain key drivers for 2025 as well.

Abhishek Bhutani, MD, Logistics & Industrial and Ahmedabad, Cushman & Wakefield says: "We anticipate the demand for logistics and industrial spaces to remain robust in 2025, supported by India’s expanding retail consumption base and continued manufacturing growth. Additionally, we anticipate 25 million square feet of Grade-A warehousing supply to hit the market over the next 2-3 years, concentrated in West and South India with major projects in Mumbai, Pune, Chennai, and Bengaluru.”

Emergence of new alternate corridors

The market is likely to diversify in 2025 as land prices have risen considerably in 2023 and 2024. "For example, land transaction for a proposed warehouse in Farukh Nagar, Gurugram, was concluded at Rs 5.8 cr per acre in 2024; the rate in 2023 in the same submarket was close to Rs 2.3 cr per acre. Similarly, land prices in Chakan, Pune and Bhiwandi, Thane (near Mumbai) have risen 20-25% since 2023," says the report.

Most prime L&I submarkets across top-8 cities are experiencing land supply constraints as these locations have now become attractive for developers in the affordable housing space too, finds the report. On the contrary, the warehousing and industrial rentals broadly remain stagnant. "Rising land prices and consistent rise in cost of construction will force landlords in the warehousing and industrial space to look for new peripheral locations that attract competitive land prices."

West, South India to see robust inventory addition

Cumulatively, 800-1000 acres of land in Mumbai, Pune, Chennai, and Bengaluru have Grade-A warehouses under development which roughly translates to 25 msf of leasable area. This supply is expected to hit the market over next 2-3 years. "The speed of development will depend upon space off-take in the coming 12 months and rentals. Warehousing rentals have remained stagnant in most submarkets across India except for only a couple of outlier clusters. The trend in rentals is expected to continue for 2025 as well."