Industrial & Warehousing Demand At All-time High

With about 20 million sq ft of leasing activity in H1 2025 at 33 per cent YoY growth, industrial and warehousing demand across the top eight Indian cities remained robust. Delhi NCR and Chennai led the demand, cumulatively accounting for about half of the overall leasing in H1 2025. Interestingly among these cities, Delhi NCR, Chennai, Mumbai and Bengaluru saw impressive demand of at least 2 million sq ft during the first half of the year, says a report by global property consulting firm Colliers.

Third Party Logistics (3PL) players continued to be the primary drivers of space uptake in Grade A warehouses and industrial sheds, contributing to about 32 per cent share in overall demand during the first half of the year. In fact, demand from most occupier segments, including 3PL, engineering, e-commerce, automobile and retail firms rose significantly during H1 2025. Meanwhile, at the micro market level, warehousing space uptake was the highest in Bhiwandi (near Mumbai) at 3.1 million sq ft, followed by Oragadam (Chennai) at 1.5 million sq ft.

Vijay Ganesh, Managing Director, Industrial & Logistics Services, Colliers India.

“During the second quarter of 2025, industrial and warehousing sector saw about 11 million sq ft of demand across the top eight cities, a 52 per cent rise YoY. Notably, Q2 recorded the highest quarterly gross absorption in the last few years. Delhi NCR drove around one-fourth of the quarterly demand at 2.5 million sq ft of Grade A space uptake. The demand in the region was led by large space uptake in Farukhnagar and Kulana micro markets. In fact, cities like Delhi NCR, Mumbai and Chennai, with 60 per cent demand share in Q2 2025, continued to drive industrial and warehousing sector in India. The growth momentum is likely to remain unabated in the forthcoming quarters, setting the stage for a strong performance in 2025,” says Vijay Ganesh, Managing Director, Industrial & Logistics Services, Colliers India.

During the first half of 2025, 3PL players continued to dominate demand, accounting for around one-third of the leasing activity. Concurrently, space uptake by other occupier segments such as engineering, e-commerce and automobile were also notable, with each segment accounting for 2-4 million sq ft of space take up, during H1 2025.

Vimal Nadar, National Director & Head of Research, Colliers India.

“The industrial & warehousing sector witnessed strong space uptake in the first half of 2025 with around 20 mn sq ft of leasing, driven by robust demand across a diverse range of occupier segments. While 3PL players continue to lead overall demand, engineering, e-commerce and automobile segments have been steadily gaining traction over the last few quarters. Each of these three segments accounted for around 10-20 per cent of the Grade A space uptake in H1 2025. This heterogeneity of demand reflects the sector’s resilience and aligns with the broad-based growth prospects in the domestic economy. It also sets a strong foundation for continued growth in industrial & warehousing sector through the rest of 2025,” says Vimal Nadar, National Director & Head of Research, Colliers India.

During H1 2025, large deals (>200,000 sq ft) accounted for about half of the demand. Although a vast majority of these larger deals came from 3PL players, e-commerce and engineering segments too continued to witness large warehousing space requirements. At the city level, Delhi NCR followed by Mumbai dominated large-sized deals during H1 2025.

The first six months of 2025 saw new supply to the tune of 19 million sq ft, an 11 per cent YoY rise. The new supply was almost in line with the strong leasing activity during H1 2025, indicating improved developer confidence in the industrial and warehousing market. Taking cognizance of healthy demand across major cities and business environment, developers have been infusing high quality warehousing facilities replete with technologically advanced features, says the Colliers report.

Overall vacancy levels remained stable on a sequential basis and stood at 13.5 per cent at the end of H1 2025. Meanwhile, amidst healthy demand and high-quality supply infusion, rentals in key micro markets saw a notable uptick.