Tier 2 & 3 Cities, Growth Drivers In India’s Warehousing Sector

Mumbai: India’s total warehousing stock reached 533.1 million square feet last year, with emerging tier 2 and 3 cities now contributing approximately 100 million sq ft, or about 18.7 per cent of the total stock, according to a report released on Thursday.

This shift represents a fundamental change in the country’s logistics map towards hub-and-spoke model, improving last-mile delivery capabilities as envisioned during the implementation of goods and service tax (GST), said the report by leading real estate firm JLL. The Indian warehousing market has experienced remarkable growth in major cities since implementation of GST. Growth is now expanding to emerging tier II-III cities as hub and spoke model is playing out. The emerging cities saw noteworthy 100 million sq ft of stock in 2024, a four-fold increase since 2017, the report stated.

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 centres 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 centres, according to the report.

“This momentum is expected 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.