3PL Operators Drive India's Warehousing Demand, Account For Up To 42% Of Annual Absorption

New Delhi, Aug 21 (KNN) Third-party logistics (3PL) operators are emerging as the largest occupiers of warehousing space in India, driving demand for larger, higher-quality and technology-enabled facilities as companies increasingly outsource storage and supply-chain operations.

3PL operators accounted for 28-42 per cent of India’s annual gross warehousing absorption since 2021, according to JLL India data cited by Economic Times. They leased over 110 million sq ft between 2021 and H1 2026, including 11.1 million sq ft in H1 2026.

E-commerce, retail, engineering and industrial manufacturing make up more than two-thirds of major 3PL companies’ contract logistics portfolios, reflecting growing demand for outsourced logistics services.

Demand Shifts Towards Grade A Facilities

3PL expansion is driving demand for larger, higher-quality warehouses. Grade A facilities accounted for 57 per cent of 3PL and logistics absorption in 2025, up from 50 per cent in 2021, and 53 per cent in H1 2026.

Average transaction sizes rose 25 per cent to 125,000 sq ft in 2025, while Grade A deals averaged 145,000 sq ft. Warehouse rents also increased, with overall 3PL rents reaching Rs 21 per sq ft and Grade A rents Rs 23 per sq ft in 2025.

JLL’s Yogesh Shevade said 3PL has become a consistent source of warehouse demand, driven by investments in automation, sustainability and technology-enabled infrastructure.

Multi-Client Facilities Gain Traction

Outsourced logistics is expanding beyond basic storage to integrated services covering inventory management, distribution and technology-enabled operations.

Allcargo Logistics MD and CEO Ketan Kulkarni said multi-tenanted warehouses are gaining traction as logistics firms seek flexibility and lower concentration risks. 

Multi-client logistics parks are also expected to grow, with location, connectivity and facility specifications becoming key to reducing freight costs and improving inventory and service efficiency.

3PL Demand Expands Beyond Major Hubs

Delhi-NCR, Mumbai Metropolitan Region, Bengaluru, Pune and Chennai remain key warehousing markets. However, 3PL operators are increasingly expanding into Tier-II and Tier-III cities to bring distribution centres closer to consumption markets.

Nagpur, Lucknow, Jaipur, Coimbatore and Guwahati are among the emerging locations attracting greater interest as companies expand regional and last-mile networks.

Leasing and Built-to-Suit Models Gain Ground

Most large 3PL operators prefer leasing warehouses over owning them, enabling expansion without major capital investment. Built-to-suit facilities are also gaining traction for specialised needs such as automation, cold storage and customised logistics.

The trend points to a more organised, technology-driven warehousing sector, with demand shifting towards facilities that enable faster, efficient and scalable supply chains.

(KNN Bureau)