Delhi-NCR Warehousing Rents Climb Sharply

Warehousing and industrial space rents in key Delhi-NCR areas like Farukh Nagar and NH-48 have surged nearly 30% in five years, now costing ₹21-28 per sq ft monthly. This surge reflects a larger trend across India's logistics sector: activity is heavily concentrated in a few high-performing clusters. Colliers India reports that just 13 such clusters make up about 70-80% of the nation's warehousing demand and supply. Since 2021, these hubs, including Farukh Nagar (31.5 million sq ft Grade A) and NH-48 (26.6 million sq ft) in Delhi-NCR, have absorbed roughly 75% of sector demand and new supply. Better infrastructure, improved transport links, and closeness to consumers are driving rental growth and property value increases in these specific locations.

Key Drivers: Manufacturing, E-commerce, and Policy Support

India's industrial and warehousing market is a top-performing real estate asset class, boosted by more than just infrastructure. Grade A warehouse space has almost doubled since 2021, reaching 299.2 million sq ft by Q1 2026. This growth is driven by economic factors and a rise in institutional investment. The 'China Plus One' strategy encourages manufacturing shifts, while government programs like PLI schemes and the Gati Shakti Master Plan support domestic production and logistics. Strong demand also comes from third-party logistics (3PL) providers, e-commerce, automotive, and engineering firms. This trend is coupled with increased institutional investment, favoring well-equipped Grade A facilities. Mumbai's Bhiwandi, with 42.1 million sq ft, remains India's largest cluster due to its port access and expressways.

Risks Emerge from Cluster Concentration

However, this heavy concentration in a few key clusters also creates significant risks. Intense competition within these prime areas could eventually push down rental growth and profit margins. The sector's dependence on specific drivers like manufacturing and e-commerce means volatility is a concern; a slowdown in these areas could stress the focused cluster model, leaving little room to adapt. Furthermore, India's logistics costs, at 13-14% of GDP (vs. 8% globally), point to deeper structural issues that cluster growth alone may not fix. This focus also prompts questions about long-term viability and potential missed opportunities in developing Tier-II and Tier-III cities.

Positive Outlook Despite Challenges

Despite these risks, the outlook for India's industrial and warehousing market remains strong. Colliers forecasts average rents to increase by 5-10% annually in most key clusters, driven by demand for institutional-grade assets and infrastructure development. Total Grade A stock is expected to grow by nearly 28% annually until 2029. The market is entering a faster growth phase, led by these active clusters, supported by policy, connectivity, and expanding manufacturing and logistics. The sector is becoming more complex, tech-driven, and sustainability-focused, pointing to continued evolution and investment.