India’s logistics and industrial sector has shown impressive growth in the first half of 2024, demonstrating its resilience and importance in the market, according to a report by real estate firm JLL.

In major cities like Mumbai, Delhi NCR, Bengaluru, Kolkata, Chennai, Hyderabad, Ahmedabad, and Pune, rents for both Grade A and Grade B properties increased significantly year-on-year by 4.8 per cent and 6.4 per cent, respectively, due to strong demand for warehousing and light manufacturing leases, as highlighted in the report.

Grade A properties had a vacancy rate of 6.6 per cent in H1 2024, while Grade B properties had a vacancy rate of 15.4 per cent. Gross absorption across the top eight cities amounted to around 24.2 million sq. ft., with Grade A properties contributing 70 per cent and Grade B properties contributing 30 per cent. The total supply of industrial properties has reached 393 million sq. ft., with expectations to grow to approximately 595 million sq. ft. by 2027, reflecting the sector’s strong potential.

“Organised Grade A warehousing supply stood at 204 million sq. ft. surpassing the Grade B supply of 189 million sq. ft thus indicating a strong preference of tenants to go for future-ready spaces that can increase warehouse efficiency, ESG compliance and automation needs,” said Yogesh Shevade, Head, Logistics & Industrial, India, JLL.

According to the report, the third-party logistics (3PL) sector remained the largest demand driver, accounting for 38 per cent of gross absorption, followed by the auto and engineering sector at 23 per cent, with the FMCG, FMCD, and retail sectors contributing 20 per cent.

Key transactions spanned sectors such as logistics, e-commerce, auto and engineering, FMCG, FMCD, and retail. The warehousing sector’s growth drivers include the rise of quick commerce, the National Logistics Policy, increased e-commerce penetration into Tier I and II/III cities, and the outsourcing of warehouse space to 3PL.

The report also noted that Grade A warehousing is becoming more attractive due to lower rents and higher efficiency per pallet positions compared to Grade B properties. The industry is placing more emphasis on ESG (Environmental, Social, and Governance) considerations, with sustainability practices being integrated into construction and operations.