The industrial and logistics sector demonstrated resilience in Q3 2024, achieving an absorption of 17.5 million square feet—up from 11.4 million square feet in Q3 2023, according to the latest report by Savills India, a global real estate advisory firm.
This represents a substantial Y-o-Y increase of 53.5 per cent, solidifying India’s status as a burgeoning hub for industrial and logistics operations. Tier I cities led the charge in absorption, accounting for 14.0 million square feet (80 per cent) of the total, while Tier II and III cities contributed 3.5 million square feet (20 per cent).
This growth was driven primarily by sustained demand from the third-party logistics (3PL) sector, which comprised 38 per cent of total absorption, alongside manufacturing at 16 per cent. Notably, there was a sharp rise in demand from the fast-moving consumer goods (FMCG) and fast-moving consumer durables (FMCD) sectors, contributing 17 per cent.
In addition to strong absorption rates, the sector witnessed a fresh supply of 19.3 million square feet in Q3 2024, reflecting a 9 per cent year-on-year growth compared to Q3 2023. Tier I cities accounted for the majority of this supply, with 16.4 million square feet (85 per cent), while Tier II and III cities contributed 2.9 million square feet (15 per cent).
Delhi-NCR emerged as the top performer, contributing 22 per cent of the total supply and 17 per cent of the absorption, followed by Bangalore with 18 per cent of the supply and Kolkata and Chennai are each at 12 per cent. The 3PL, FMCG/FMCD, and manufacturing sectors collectively drove 71 per cent of the total demand, underscoring the strength of these industries in the market. The e-commerce sector contributed 8 per cent to the overall demand.
Looking forward, significant expansion is anticipated within the industrial and logistics sectors, bolstered by a favorable demand environment and proactive government initiatives. In 2024, manufacturing and warehouse space absorption is projected to exceed 60 million sq. ft., with supply expected to surpass 65 million sq. ft.
Furthermore, Tier II and III cities are set to emerge as crucial hubs for sourcing, consumption, and distribution, driven by substantial growth opportunities. The 3PL and manufacturing sectors will continue to propel demand, along with a heightened requirement for FMCG/FMCD spaces. Additionally, the e-commerce sector is gearing up for increased activity as it enhances its urban distribution networks and extends its presence into Tier II and III cities, including Guwahati, Bhubaneswar, Patna, Hosur, Coimbatore, and others.
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