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India's Grade A industrial and warehousing sector recorded a 33% year-on-year increase in demand during the first half of 2025, with leasing activity reaching approximately 20 million sq ft across the top eight cities. Delhi NCR and Chennai accounted for nearly half of this demand, driven largely by 3PL, engineering, and e-commerce firms. Major deals exceeding 200,000 sq ft constituted more than half of the leasing activity, with new supply almost matching demand at 19 million sq ft. Vacancy rates remained steady, while key micro markets experienced rental escalations.
India's Grade A industrial and warehousing segment recorded robust leasing activity during the first half of 2025, with gross absorption touching nearly 20 million sq ft across the top eight cities. This marked a 33% year-on-year growth, underscoring the sector's resilience amid a diversified demand base. Delhi NCR and Chennai emerged as the leading hubs, collectively contributing around 50% of the total space leased. Advertisement
Among individual cities, Delhi NCR saw the highest leasing volume at 5.6 million sq ft, representing a 75% year-on-year increase. Mumbai followed with 3.1 million sq ft of absorption, up 24%, while Chennai and Bengaluru recorded 3.7 million sq ft and 2 million sq ft respectively. Ahmedabad doubled its gross absorption to 1.2 million sq ft from the previous year, and Hyderabad witnessed a 120% rise in demand.
Third-party logistics (3PL) firms remained the top contributors, accounting for approximately 32% of total leasing. According to Colliers India, leasing demand from engineering, e-commerce, automobile, and retail firms also saw a significant uptick. The most active micro markets included Bhiwandi in Mumbai, which registered 3.1 million sq ft of uptake, and Oragadam in Chennai, which followed with 1.5 million sq ft.
During the second quarter of 2025 alone, the sector witnessed 11 million sq ft of demand-representing a 52% year-on-year growth and marking the highest quarterly gross absorption in recent years. Delhi NCR led Q2 activity, driven by substantial deals in Farukhnagar and Kulana, while Mumbai and Chennai together accounted for 60% of the overall leasing volume in the quarter.
Large-scale transactions exceeding 200,000 sq ft accounted for 51% of gross leasing across the eight major cities. Although 3PL operators dominated these big-ticket deals, the engineering and e-commerce sectors also contributed significantly. Delhi NCR and Mumbai saw the highest number of large transactions during this period.
Supply levels kept pace with demand, with 19.4 million sq ft of new Grade A supply entering the market in the first six months of 2025, reflecting an 11% annual rise. In Q2 alone, completions reached 10 million sq f-the highest in recent quarters-showcasing growing developer confidence. Much of the new supply was concentrated in Delhi NCR and Chennai, which together contributed nearly half of the completions. Developers have been increasingly incorporating high-tech features into new facilities, aligning with evolving occupier needs.
City-level supply data revealed significant year-on-year gains in cities like Mumbai, where completions rose by 127%, and Hyderabad, which experienced a 29% increase. However, Pune and Bengaluru witnessed a decline in new supply, down by 40% and 25%, respectively.
According to industry experts at Colliers, the consistent performance and diversity of occupier segments indicate sustained momentum in the sector. Engineering, e-commerce, and automotive firms each accounted for 10-20% of total leasing during the first half, illustrating broad-based demand beyond the dominant 3PLs.
Vacancy levels across Grade A warehouses remained stable at 13.5%, while rentals appreciated across major micro markets, driven by quality supply and sustained demand.
Source - PTI
5th Jun, 2025
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