India's Logistics Real Estate: A Transformative Journey with Zafeer Ahmed
India's warehousing and logistics real estate sector is experiencing rapid growth, driven by e-commerce, policy reforms, and infrastructure development. Zafeer Ahmed of XRE Consultants shares insights on the trends and challenges shaping this dynamic sector.
Logistics Real EstateWarehousingEcommerceTier2 CorridorsIntegrated Logistics ParksReal EstateSep 18, 2025
Real Estate:India's warehousing and logistics real estate sector has witnessed exponential growth in recent years, fueled by e-commerce expansion, policy reforms, and large-scale infrastructure development. From the rise of Tier-2 logistics corridors to the adoption of integrated logistics parks and built-to-suit (BTS) facilities, the industry is rapidly evolving to meet the demands of a modern, consumption-driven economy.
In an exclusive interaction, Zafeer Ahmed, Managing Director of XRE Consultants, shares his insights on the trends, opportunities, and challenges shaping this dynamic sector.
1. How has India’s warehousing and logistics real estate sector grown in recent years, and what are the key factors driving this expansion?
India's warehousing and logistics real estate market has registered a boom over the last several years, driven by increasing e-commerce penetration, growing consumer demand, and government emphasis on infrastructure development. The introduction of GST created a single national market, increasing logistics service providers’ focus on efficient supply chains and centralized warehousing.
Organized retail and 3PL services have also seen a sharp rise, creating demand for contemporary, tech-enabled warehousing. Foreign direct investment and ease of doing business have brought substantial capital into the sector. The logistics sector in India is predicted to account for 14.4% of the GDP. Urbanization and digitalization also contribute to growth, prompting firms to streamline distribution networks and invest in new facilities for faster, lower-cost delivery.
The warehouse and logistics industry benefited the most from the COVID-19 pandemic, increasing its share from 2% in 2020 to 20% in 2021. The logistics sector in India was valued at US$250 billion in 2021, with the market projected to reach US$380 billion by 2025.
2. What role are Tier-2 logistics corridors playing in reshaping the logistics real estate landscape across India?
Tier-2 logistics corridors, where warehousing moves out of urban agglomerations and develops around hubs apart from major metros, are emerging as game changers. These corridors offer inexpensive land and labor, helping companies save on operational costs. Situated near manufacturing clusters, ports, and highways, Tier-2 corridors enhance connectivity, facilitating smoother traffic flow and efficient supply chains.
Tier-2 cities offer exciting growth prospects for investors and developers due to rising demand and large untapped markets. Overall, these corridors are redefining India’s logistics landscape, making warehousing space more accessible, cost-effective, and strategically positioned to support the expanding economy.
Major players like Indospace, Ascendas, Welspun, and NDR have already expanded into Tier-2 cities and are eyeing land in Tier-3 cities as well. Cities such as Lucknow, Jaipur, Ambala, Patna, Surat, Vadodara, Indore, Kochi, and Visakhapatnam are gaining traction and reaching capacity quickly.
3. Could you explain the concept and advantages of integrated logistics parks (ILPs) for businesses and investors?
Integrated logistics parks (ILPs) combine warehousing, distribution centers, transportation hubs, and occasionally production units into a single, large-scale facility. For companies, ILPs represent a more efficient supply chain environment, reducing transport time, costs, and operational complexity.
Modern infrastructure, such as cold storage, container handling, and multimodal connectivity, creates opportunities for sectors including retail, pharmaceuticals, and FMCG. For investors, ILPs provide increased asset utilization, long-term returns, and diversification through multi-tenant setups. Government policy incentives further enhance their appeal. ILPs boost efficiency, scalability, and sustainability by fostering synergies between various logistics activities, benefiting all stakeholders.
4. Built-to-suit (BTS) warehouse solutions are gaining traction—how are these transforming the way companies plan their supply chains?
Built-to-suit (BTS) warehouses are customized buildings constructed to meet specific company requirements. This flexibility allows companies to tailor layouts, technology, and operations precisely to their supply chain needs. BTS facilities mitigate the risks of leasing generic space and eliminate fit-out costs.
BTS warehouses are scalable, allowing companies to future-proof operations as usage patterns change. By collaborating with developers, firms can incorporate the latest energy efficiency, automation, and security features. Approximately 30% of total warehouse transactions in India are BTS facilities. At XRE, we have executed BTS projects for companies like DHL, Gati, and Manitou, demonstrating our expertise in delivering tailored solutions.
5. What are the main challenges developers and investors face in India’s warehousing and logistics real estate, and how can these be mitigated?
Developers, landowners, and investors face challenges such as land acquisition issues, regulatory bottlenecks, and inadequate infrastructure. Projects are often delayed due to fragmented ownership, unclear titles, and complex approvals from multiple agencies. Poor road connectivity and inconsistent power supply also affect operational efficiency.
To mitigate these challenges, attention is shifting to Tier-2 corridors with easier land access and streamlined government procedures. Policy changes and government initiatives, such as logistics parks and dedicated freight corridors, serve as key enablers. Developers are increasingly leveraging technology for project management and collaborating with experienced professionals to minimize risks. Public-private partnerships will be critical for addressing bottlenecks and accelerating expansion.
6. How has the rise of e-commerce, retail, and 3PL companies influenced demand for modern warehouses and logistics spaces?
The rapid rise of e-commerce, organized retail, and 3PL players has transformed demand for modern warehousing. These industries require state-of-the-art facilities equipped with automation, robotics, and real-time inventory management to meet short delivery windows and high SKU counts.
Warehouses near urban centers and transportation hubs are particularly sought after for efficient last-mile delivery. 3PL companies provide end-to-end logistics solutions, driving the need for flexible, technology-driven warehouses. Currently, approximately 30% of leasing is by e-commerce and 3PL each, 10–12% by retail, with the rest from other industries.
7. Can you share any recent examples or success stories where XRE Consultants helped clients leverage Tier-2 corridors, integrated parks, or BTS projects?
XRE Consultants has partnered with leading 3PL, e-commerce, FMCG, and white goods companies to deliver BTS warehouses across Tier-2 logistics corridors in India.
One example is a 1.25 lakh sq. ft. cross-dock facility in Lucknow for a Fortune 500 3PL company. Unlike standard warehouses with docks on a single side, cross-dock facilities have docks on both horizontal sides, which are difficult to source due to specific width and length requirements.
XRE sourced a compliant, legal facility within the preferred zone and built it from scratch in just 10 months. The A-Grade facility features 12-meter clear height, 1.2-meter plinth level, dock levelers, ridge monitors, and ample docks. A mezzanine accommodates offices, training centers, and light goods storage. Located in a 50-acre integrated logistics park, the facility includes fire systems, rainwater harvesting, STPs, CCTV surveillance, wide roads, and ample parking. It is fully compliant and UPSIDA-approved, showcasing XRE’s ability to deliver customized, efficient, and sustainable solutions.
8. What trends or opportunities do you foresee shaping India’s warehousing and logistics real estate over the next 3–5 years?
The next 3–5 years are expected to witness a further boom in India’s warehousing and logistics real estate, driven by digital adoption and evolving customer behaviors. Key trends include greater integration of automation and robotics to enhance productivity and reduce labor requirements. Sustainability will also be a major focus, with an increasing number of green and LEED-certified warehouses featuring energy-efficient designs and solar power.
Tier-2 and Tier-3 city corridors are poised to emerge as attractive hubs due to competitive rents and flexible access. Demand for various warehouse formats will continue to grow alongside the rise of omnichannel retail, while flexible leasing and BTS projects will enable companies to respond quickly to market developments. These trends present significant opportunities for investors and developers to create and expand new ventures.
However, challenges remain, including power usage, sustainability, land acquisition approvals, workforce skill gaps, and cybersecurity risks. Currently, logistics costs are around 13–14% of GDP. With the adoption of modern technologies and improvements under the National Logistics Policy, these costs are expected to drop to single digits, positioning India to compete head-to-head with other APAC countries and emerge as a global leader in logistics.
India’s warehousing and logistics real estate sector is entering a golden era, driven by structural reforms, digital adoption, and surging demand from e-commerce, retail, and 3PL players. Tier-2 corridors and BTS solutions are gaining prominence, while sustainability and technology continue to reshape the industry.
In an exclusive interaction, Zafeer Ahmed, Managing Director of XRE Consultants, shares his insights on the trends, opportunities, and challenges shaping this dynamic sector.
1. How has India’s warehousing and logistics real estate sector grown in recent years, and what are the key factors driving this expansion?
India's warehousing and logistics real estate market has registered a boom over the last several years, driven by increasing e-commerce penetration, growing consumer demand, and government emphasis on infrastructure development. The introduction of GST created a single national market, increasing logistics service providers’ focus on efficient supply chains and centralized warehousing.
Organized retail and 3PL services have also seen a sharp rise, creating demand for contemporary, tech-enabled warehousing. Foreign direct investment and ease of doing business have brought substantial capital into the sector. The logistics sector in India is predicted to account for 14.4% of the GDP. Urbanization and digitalization also contribute to growth, prompting firms to streamline distribution networks and invest in new facilities for faster, lower-cost delivery.
The warehouse and logistics industry benefited the most from the COVID-19 pandemic, increasing its share from 2% in 2020 to 20% in 2021. The logistics sector in India was valued at US$250 billion in 2021, with the market projected to reach US$380 billion by 2025.
2. What role are Tier-2 logistics corridors playing in reshaping the logistics real estate landscape across India?
Tier-2 logistics corridors, where warehousing moves out of urban agglomerations and develops around hubs apart from major metros, are emerging as game changers. These corridors offer inexpensive land and labor, helping companies save on operational costs. Situated near manufacturing clusters, ports, and highways, Tier-2 corridors enhance connectivity, facilitating smoother traffic flow and efficient supply chains.
Tier-2 cities offer exciting growth prospects for investors and developers due to rising demand and large untapped markets. Overall, these corridors are redefining India’s logistics landscape, making warehousing space more accessible, cost-effective, and strategically positioned to support the expanding economy.
Major players like Indospace, Ascendas, Welspun, and NDR have already expanded into Tier-2 cities and are eyeing land in Tier-3 cities as well. Cities such as Lucknow, Jaipur, Ambala, Patna, Surat, Vadodara, Indore, Kochi, and Visakhapatnam are gaining traction and reaching capacity quickly.
3. Could you explain the concept and advantages of integrated logistics parks (ILPs) for businesses and investors?
Integrated logistics parks (ILPs) combine warehousing, distribution centers, transportation hubs, and occasionally production units into a single, large-scale facility. For companies, ILPs represent a more efficient supply chain environment, reducing transport time, costs, and operational complexity.
Modern infrastructure, such as cold storage, container handling, and multimodal connectivity, creates opportunities for sectors including retail, pharmaceuticals, and FMCG. For investors, ILPs provide increased asset utilization, long-term returns, and diversification through multi-tenant setups. Government policy incentives further enhance their appeal. ILPs boost efficiency, scalability, and sustainability by fostering synergies between various logistics activities, benefiting all stakeholders.
4. Built-to-suit (BTS) warehouse solutions are gaining traction—how are these transforming the way companies plan their supply chains?
Built-to-suit (BTS) warehouses are customized buildings constructed to meet specific company requirements. This flexibility allows companies to tailor layouts, technology, and operations precisely to their supply chain needs. BTS facilities mitigate the risks of leasing generic space and eliminate fit-out costs.
BTS warehouses are scalable, allowing companies to future-proof operations as usage patterns change. By collaborating with developers, firms can incorporate the latest energy efficiency, automation, and security features. Approximately 30% of total warehouse transactions in India are BTS facilities. At XRE, we have executed BTS projects for companies like DHL, Gati, and Manitou, demonstrating our expertise in delivering tailored solutions.
5. What are the main challenges developers and investors face in India’s warehousing and logistics real estate, and how can these be mitigated?
Developers, landowners, and investors face challenges such as land acquisition issues, regulatory bottlenecks, and inadequate infrastructure. Projects are often delayed due to fragmented ownership, unclear titles, and complex approvals from multiple agencies. Poor road connectivity and inconsistent power supply also affect operational efficiency.
To mitigate these challenges, attention is shifting to Tier-2 corridors with easier land access and streamlined government procedures. Policy changes and government initiatives, such as logistics parks and dedicated freight corridors, serve as key enablers. Developers are increasingly leveraging technology for project management and collaborating with experienced professionals to minimize risks. Public-private partnerships will be critical for addressing bottlenecks and accelerating expansion.
6. How has the rise of e-commerce, retail, and 3PL companies influenced demand for modern warehouses and logistics spaces?
The rapid rise of e-commerce, organized retail, and 3PL players has transformed demand for modern warehousing. These industries require state-of-the-art facilities equipped with automation, robotics, and real-time inventory management to meet short delivery windows and high SKU counts.
Warehouses near urban centers and transportation hubs are particularly sought after for efficient last-mile delivery. 3PL companies provide end-to-end logistics solutions, driving the need for flexible, technology-driven warehouses. Currently, approximately 30% of leasing is by e-commerce and 3PL each, 10–12% by retail, with the rest from other industries.
7. Can you share any recent examples or success stories where XRE Consultants helped clients leverage Tier-2 corridors, integrated parks, or BTS projects?
XRE Consultants has partnered with leading 3PL, e-commerce, FMCG, and white goods companies to deliver BTS warehouses across Tier-2 logistics corridors in India.
One example is a 1.25 lakh sq. ft. cross-dock facility in Lucknow for a Fortune 500 3PL company. Unlike standard warehouses with docks on a single side, cross-dock facilities have docks on both horizontal sides, which are difficult to source due to specific width and length requirements.
XRE sourced a compliant, legal facility within the preferred zone and built it from scratch in just 10 months. The A-Grade facility features 12-meter clear height, 1.2-meter plinth level, dock levelers, ridge monitors, and ample docks. A mezzanine accommodates offices, training centers, and light goods storage. Located in a 50-acre integrated logistics park, the facility includes fire systems, rainwater harvesting, STPs, CCTV surveillance, wide roads, and ample parking. It is fully compliant and UPSIDA-approved, showcasing XRE’s ability to deliver customized, efficient, and sustainable solutions.
8. What trends or opportunities do you foresee shaping India’s warehousing and logistics real estate over the next 3–5 years?
The next 3–5 years are expected to witness a further boom in India’s warehousing and logistics real estate, driven by digital adoption and evolving customer behaviors. Key trends include greater integration of automation and robotics to enhance productivity and reduce labor requirements. Sustainability will also be a major focus, with an increasing number of green and LEED-certified warehouses featuring energy-efficient designs and solar power.
Tier-2 and Tier-3 city corridors are poised to emerge as attractive hubs due to competitive rents and flexible access. Demand for various warehouse formats will continue to grow alongside the rise of omnichannel retail, while flexible leasing and BTS projects will enable companies to respond quickly to market developments. These trends present significant opportunities for investors and developers to create and expand new ventures.
However, challenges remain, including power usage, sustainability, land acquisition approvals, workforce skill gaps, and cybersecurity risks. Currently, logistics costs are around 13–14% of GDP. With the adoption of modern technologies and improvements under the National Logistics Policy, these costs are expected to drop to single digits, positioning India to compete head-to-head with other APAC countries and emerge as a global leader in logistics.
India’s warehousing and logistics real estate sector is entering a golden era, driven by structural reforms, digital adoption, and surging demand from e-commerce, retail, and 3PL players. Tier-2 corridors and BTS solutions are gaining prominence, while sustainability and technology continue to reshape the industry.
Frequently Asked Questions
What is driving the growth of India’s warehousing and logistics real estate sector?
The growth is driven by e-commerce expansion, policy reforms, and infrastructure development, including the introduction of GST and increased foreign direct investment.
What are the benefits of Tier-2 logistics corridors?
Tier-2 logistics corridors offer inexpensive land and labor, better connectivity, and strategic positioning, making them cost-effective and efficient for warehousing and logistics.
What are integrated logistics parks (ILPs), and why are they important?
ILPs combine various logistics activities into a single facility, enhancing efficiency, reducing costs, and providing modern infrastructure for different sectors.
What are built-to-suit (BTS) warehouses, and how do they benefit companies?
BTS warehouses are customized to meet specific company needs, offering flexibility, cost savings, and the ability to incorporate advanced technology and features.
What challenges do developers and investors face in India’s warehousing and logistics real estate sector?
Challenges include land acquisition issues, regulatory bottlenecks, and inadequate infrastructure, which can be mitigated through policy changes and public-private partnerships.
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