Logistics & Industrial (L&I) real estate leasing volume for 2024 is expected to reach 50-53 million square feet, marking the third consecutive year with leasing volume exceeding 50 million sq ft, according to a report by property consultant Cushman & Wakefield.
As of October 2024, leasing volume has already surpassed 41 million square feet across the top eight real estate markets. Since the introduction of the Production-Linked Incentive (PLI) scheme in 2020, industrial leasing has seen strong growth. Moreover, the rapid expansion of retail and e-commerce has fueled significant activity in the warehousing sector, according to Cushman & Wakefield.
“For 2025, we foresee the new-normal level of demand to 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,” it said.
The surge in the engineering & manufacturing (E&M) sector, the strengthening of 3PL operators, and the growth of the retail industry have been key drivers of demand for L&I space in recent years. These factors are expected to remain crucial in 2025 as well. Additionally, cities such as Pune, Chennai, and Bengaluru have experienced healthy leasing volumes, while other cities show a positive outlook, according to the report.
The market is expected to diversify in 2025, as land prices have risen significantly in 2023 and 2024, according to Cushman & Wakefield. For example, land transactions for a proposed warehouse in Farukh Nagar, Gurugram, were concluded at `5.8 crore per acre in 2024, up from around Rs 2.3 crore per acre in 2023. Similarly, land prices in Chakan, Pune, and Bhiwandi, Thane (near Mumbai), have increased by 20-25% since 2023.
“Most of the 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. Rising land prices and consistent rise in the cost of construction will force landlords in the warehousing and industrial space to look for new peripheral locations that attract competitive land prices,” it said
Cumulatively, 800-1000 acres of land in Mumbai, Pune, Chennai, and Bengaluru have Grade-A warehouses under development which roughly translates to 25 million sq ft of leasable area, it said.
This supply is expected to hit the market over the 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, it said.
Abhishek Bhutani, managing director, Logistics & Industrial and Ahmedabad, Cushman & Wakefield said: “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 sq ft 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.”