India’s warehousing and logistics sector has moved from being a support function to a strategic asset class at the centre of supply chain, e‑commerce and manufacturing growth. Investors, developers and occupiers now treat modern warehouses as infrastructure-grade assets with clear yield, scale and exit visibility.
With total warehousing stock in the top 20 cities crossing around 533 million sq. ft by 2024, and Tier II and III locations already contributing about 100 million sq. ft, the asset class has firmly transitioned into a mainstream institutional play. At the same time, a sharp pivot towards green, certified Grade A facilities is reshaping how capital is deployed and how occupiers choose space.
Structural Demand Drivers: E‑commerce, Manufacturing and 3PL
The demand story rests on three powerful, long-term engines that go well beyond any single business cycle.
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E‑commerce and omni‑channel retail
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Rapid growth in online consumption has created an irreversible need for high-throughput, tech-enabled fulfilment centres and last‑mile hubs.
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Grade A warehouses with high clear heights, large floor plates, strong IT backbone and automation capability are no longer optional—they are the baseline for efficient e‑commerce operations.
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Manufacturing and “China+1”
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Policy pushes such as Make in India and Production Linked Incentive (PLI) schemes are catalysing manufacturing in sectors like automotive, electronics, energy and chemicals.
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These facilities rely on integrated warehousing for raw materials, work‑in‑progress and finished goods, with just‑in‑time and just‑in‑sequence supply chains demanding reliable, compliant storage assets.
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Third‑party logistics (3PL), FMCG and organised retail
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3PL operators now account for roughly 30% of Grade A warehousing transactions, using modern parks to run multi-client, multi-industry solutions at scale.
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FMCG and large-format retail, driven by SKU proliferation and deeper rural penetration, require temperature‑controlled, compliant, efficiently racked facilities to sustain service levels and margins.
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The net effect is a diversified demand base that reduces concentration risk and underpins long-term occupancy, making warehouses particularly attractive for institutional and HNI capital.
The Rise of Tier II and III Logistics Hubs
The post‑GST transition to a hub‑and‑spoke logistics model has fundamentally redrawn India’s warehousing map. Instead of a few tax-driven locations, occupiers now optimise for demand proximity, multi-modal connectivity and operating cost.
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As of 2024, India’s top 20 warehousing markets together host about 533.1 million sq. ft of stock, with 12 emerging Tier II and III cities contributing nearly 100 million sq. ft—around 18.7% of the total.
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Grade A spaces already form about 30% of inventory in these emerging markets, underlining the seriousness of occupier and investor intent beyond the metros.
For investors, this dispersion offers:
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Access to earlier‑stage yield compression stories in underserved cities.
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Portfolio diversification across consumption corridors rather than a narrow metro‑centric bet.
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The ability to ride structural shifts in last‑mile delivery and regional fulfilment as demand densifies.
Green Warehousing: From Nice‑to‑Have to Non‑Negotiable
Sustainability is no longer a marketing line item; it is becoming a non‑negotiable requirement for institutional tenants and global investors.
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Institutional Grade A warehousing space has tripled from 28 million sq. ft in 2019 to about 90 million sq. ft by 2024.
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Of this institutional Grade A supply, roughly 65 million sq. ft—about 72%—is already green‑certified or in the certification pipeline under LEED, IGBC, GRIHA and similar frameworks.
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Certified green warehouse space is expected to quadruple from today’s levels to approximately 270 million sq. ft by 2030, on the back of both new supply and retrofits.
The drivers are clear:
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Corporate net‑zero and ESG commitments are forcing occupiers to choose energy‑ and water‑efficient buildings, often targeting 30–40% lifecycle savings in energy consumption along with meaningful water conservation and waste recycling.
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Institutional owners recognise that green certification supports higher tenant stickiness, lower operating costs, and superior asset liquidity at exit.
Over the next cycle, I expect a clear bifurcation between future‑proofed, green Grade A parks and sub‑scale, non‑compliant stock that struggles for both tenants and capital.
Capital Flows and Investment Performance
Warehousing has emerged as one of India’s fastest‑growing real estate segments in terms of both physical absorption and capital deployment.
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India’s warehousing market is projected to reach roughly INR 2,872 billion by 2027, implying a CAGR of around 15–16% during 2022–2027.
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Industrial and logistics absorption in early 2024 showed over 20% year‑on‑year growth, signalling sustained occupier appetite even amid macro uncertainty.
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Private equity participation is robust, with over three‑quarters of surveyed PE players expressing continued interest in creating new warehousing assets, and annual investments in recent years touching the billion‑dollar mark.
Policy tailwinds amplify this momentum:
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GST, the National Logistics Policy, the National Infrastructure Pipeline and PM Gati Shakti are all geared towards reducing logistics costs and improving multimodal connectivity.
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The logistics sector’s infrastructure status improves access to long‑term institutional funding and lowers the cost of capital for developers and platform owners.
For serious investors, this combination of structural demand, policy support and deepening capital markets makes Grade A warehousing one of the most compelling income‑plus‑growth opportunities in Indian real assets today.
Future Outlook: Scale, Quality and Consolidation
The next leg of India’s warehousing story will be less about “more sheds” and more about better ecosystems.
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Total warehouse stock in India is expected to maintain double‑digit annual growth, while Grade A stock is projected to grow even faster, reflecting a clear flight to quality.
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Green, tech‑enabled parks with automation‑ready designs, strong ESG credentials and multimodal linkages will increasingly command a premium in both rents and valuations.
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As portfolios scale beyond single‑asset ownership into platforms, we are likely to see more aggregation, REIT‑readiness and ultimately public market listings focused on logistics and warehousing.
In this evolving landscape, the winners: whether investors, developers or occupiers, will be those who treat warehousing not as a commoditised box, but as a strategic, data‑driven infrastructure asset tightly integrated with supply chains, sustainability goals and capital market expectations.
