Industrial-Logistics Space Demand Hits Record High with 76.5 Million Sq Ft Leasing
India's industrial and logistics sector achieved a record-breaking performance, with leasing activity reaching 76.5 million square feet across 24 major cities, marking a 19% increase from the previous year. Manufacturing led the demand at 29%, followed by third-party logistics at 28% and e-commerce at 12%. Tier-I cities saw 20% growth, accounting for 59.50 million sq ft, while Tier-II and III cities grew by 14.5% to 17 million sq ft. Delhi-NCR remained the top performer with 13 million sq ft leased. Savills India projects the sector to exceed 80 million sq ft in both supply and absorption in the coming year.
*this image is generated using AI for illustrative purposes only.
India's industrial and logistics sector recorded its strongest performance ever, with leasing activity reaching an all-time high of 76.5 million square feet across 24 major cities. This represents a significant 19% increase from the 64.5 million square feet leased in the previous calendar year, according to data from real estate consultant Savills India.
The sector's robust growth reflects the continued post-pandemic recovery trajectory, with diverse industries driving demand for industrial and logistics spaces across the country.
Sector-wise Demand Distribution
The leasing activity was led by three key sectors that collectively accounted for nearly 70% of total demand:
| Sector | Share of Total Leasing |
|---|---|
| Manufacturing | 29% |
| Third-party Logistics | 28% |
| E-commerce | 12% |
Manufacturing companies emerged as the largest occupiers, reflecting India's growing industrial base and the government's focus on domestic production capabilities.
Tier-I Cities Lead Growth
Eight tier-I cities demonstrated exceptional performance, recording 20% growth in leasing activity. These major metropolitan areas collectively accounted for the majority of industrial and logistics space absorption:
| City Category | Leasing (million sq ft) | Previous Year Leasing (million sq ft) | Growth |
|---|---|---|---|
| Tier-I Cities | 59.50 | 49.70 | 20% |
| Tier-II & III Cities | 17.00 | 14.80 | 14.5% |
The eight tier-I cities include Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, Delhi-NCR, and Pune. Among these, Delhi-NCR maintained its position as the top performer with 13 million square feet of leasing, compared to 9.8 million square feet in the previous year.
Emerging Markets Show Promise
Tier-II and tier-III cities also contributed significantly to the overall growth, with leasing activities increasing 14.5% to 17 million square feet. The 16 cities in this category include Guwahati, Bhubaneshwar, Patna, Hosur, Coimbatore, Rajpura, Lucknow, Jaipur, Nagpur, Surat, Indore, Kochi, Hubli, Vizag, Belgaum, and Anantapur.
This growth in smaller cities indicates the geographic diversification of industrial and logistics activities, as companies seek cost-effective locations with good connectivity.
Market Outlook
Savills India projects continued momentum in the sector, expecting both supply and absorption of industrial and logistics spaces to surpass 80 million square feet in the following year. This optimistic outlook reflects the sustained demand from manufacturing, logistics, and e-commerce sectors, supported by India's economic growth and infrastructure development initiatives.
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