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Tier 2-3 cities are emerging as the new powerhouses, propelling the warehousing sector, with combined absorption across 20 warehousing markets reaching all-time high.
According to a latest report by JLL India, total warehousing stock has reached 533.1 million sq. ft, with emerging Tier II-III cities now contributing approximately 100 million sq. ft, or about 18.7% of the total stock. This shift represents a fundamental change in the country’s logistics map towards hub-and-spoke model.
| 2024 | Stock (million sq.ft.) | Absorption (million sq. ft) | Average Grade A Rents (INR/ sq. ft/ month) | Average Grade B Rents (INR/ sq. ft/ month) |
| Top 8 Tier I Cities | 438 | 51 | 24.8 | 20.5 |
| Emerging 12 Tier II-III Cities | 95 | 9 | 22.0 | 17.5 |
Source: JLL India
“The Indian warehousing market has experienced remarkable growth in major cities since implementation of GST. Growth is now expanding to emerging Tier 2-3 cities as hub and spoke model is playing out. The emerging cities saw noteworthy100 million sq. ft. of stock in 2024, a fourfold increase since 2017. This momentum is anticipated to continue, fuelled by critical infrastructure initiatives that are linking these emerging cities with major consumption hubs. This rapid development is creating investment opportunities for both investors and developers in the logistics sector. This trend is not just reshaping India’s logistics landscape, but also offering decent returns for those ready to capitalize on this burgeoning market” , says Yogesh Shevade , Head, Logistics & Industrial, India, JLL.
| City | Consumption Base – Population (million), 2024 | Stock (million sq. ft), 2024 | Growth in Stock (2017 – 2024) | Absorption (million sq. ft), 2024 |
| East | 5.1 | 22.8 | 6X | 1.6 |
| Bhubaneswar – Cuttack | 1.3 | 5.6 | 5X | 0.5 |
| Guwahati | 1.2 | 8.0 | 6X | 0.3 |
| Patna | 2.6 | 9.2 | 7X | 0.8 |
| North | 11.5 | 35.6 | 4X | 4.1 |
| Chandigarh – Rajpura | 1.2 | 14.1 | 4X | 1.7 |
| Jaipur | 4.3 | 6.0 | 4X | 0.7 |
| Lucknow | 4.0 | 8.5 | 4X | 1.2 |
| Ludhiana | 2.0 | 7.0 | 2X | 0.5 |
| South | 6.6 | 15.2 | 3X | 1.2 |
| Coimbatore | 3.1 | 6.6 | 3X | 0.7 |
| Kochi | 3.5 | 8.6 | 4X | 0.5 |
| West | 6.9 | 21.2 | 3X | 2.1 |
| Goa | 1.5 | 6.7 | 4X | 0.8 |
| Nagpur | 3.1 | 13.0 | 3X | 0.7 |
| Nashik | 2.3 | 1.5 | 3X | 0.6 |
Source: JLL India
The growth in these emerging cities is driven by several factors. The e-commerce boom, particularly the widespread ‘click and buy’ trend, is transforming India’s warehousing. This has led to increased demand for fulfillment centers closer to end consumers. Companies are also setting up smaller warehouses in these cities to improve delivery times and reduce logistics costs. These cities also offer access to larger spaces due to lower population density, ideal for warehouses near consumption centers.
Concurrently, infrastructure initiatives such as PM Gati Shakti, Bharatmala, Sagarmala, UDAN Scheme, and the development of freight corridors have optimized distribution networks. Programmes such as Make in India, Digital India, and the National Logistics Policy have fostered conducive manufacturing ecosystems across the country. The introduction of Production-Linked Incentives (PLI) and Design-Linked Incentives (DLI) schemes has incentivized companies to set up manufacturing facilities in these cities. This shift represents a fundamental transformation in India’s logistics landscape. It offers new opportunities for businesses to optimize supply chains, reduce costs, and improve delivery times. As Tier 2-3 cities continue to grow in importance, they are reshaping the competitive dynamics of India’s logistics sector and driving the future growth of the warehousing industry.
