India’s warehousing sector has grown rapidly over the last five years, with total space rising from 300 million sq ft in 2019 to 533 million sq ft in 2024, according to Equirus’ latest Real Estate Sector Trends report.
What’s driving the growth? The report cites a mix of factors, including government policy support, improved infrastructure and rising demand from smaller cities.
Central government initiatives like GST, the Gati Shakti plan, dedicated freight corridors, and the Urban Infrastructure Development Fund have made it easier to build and connect warehouses, helping the sector expand across the country.
According to the report, the demand is no longer confined to Tier 1 hubs. With 60 percent of e-commerce demand now coming from smaller cities, warehousing activity in Tier 2 and 3 cities has seen a sharp rise. These emerging markets currently contribute around 95 million sq ft or 18 per cent of total warehousing stock, a fourfold increase since 2017.
Occupiers shift towards Grade A infrastructure
A notable shift could also be seen towards better quality infrastructure. Grade A warehouses accounted for 80 per cent of new absorption in 2024 across the top eight Tier 1 cities. In emerging locations, Grade A facilities now make up around 30 percent of the warehousing stock, reflecting an occupier preference for higher standards.
Third-party logistics is still the biggest source of demand for warehouses. At the same time, demand from manufacturers has grown — from less than 20 percent before the pandemic to over 25 percent in 2024. After COVID, the rise of e-commerce and quick commerce has also increased the need for mid- and last-mile warehouses.
Tesla’s expansion signals growing investor interest
Among recent developments, Tesla expanded its India presence with a 24,000 sq ft warehousing lease at Lodha Logistics Park in Kurla West, Mumbai. The facility was taken on rent for Rs 37.5 lakh per month and marks Tesla’s second major real estate deal in the city.
Tier 1 cities maintain strong absorption levels
Warehousing stock across the top Tier 1 cities has seen consistent annual growth, rising from 238 million sq ft in 2019 to 438 million sq ft in 2024. Occupancy levels have remained stable, with Grade A facilities recording a vacancy rate of 7.9 percent, while Grade B spaces stood at 10.4 percent during the same period.
