Industrial, Logistics Sector Hits New Leasing Peak in H1 2025 at 27.1 mn sq ft

New Delhi, July 29, 2025: Industrial and logistics (I&L) leasing in January-June (H1 2025) across the top eight cities surged 63 per cent YoY to 27.1 mn sq ft (MSF), reaching a new peak, according to CBRE South Asia’s report ‘India Industrial & Logistics Figures-H1 2025’.

The third-party logistics (3PL) sector continued to lead in I&L space take-up with a market share of 32 per cent in H1 2025. However, the surge was mostly led by the e-commerce sector, which saw its market share more than double from 9 per cent in H1 2024 to 25 per cent in H1 2025. I&L leasing by engineering and manufacturing (E&M) sector also increased from 18 per cent in H1 2024 to 19 per cent H1 2025.

The January–June period witnessed a substantial surge in leasing by e-commerce driven by heightened consumer demand for diverse products, the need for quicker deliveries and the upcoming festive season. Leasing by 3PL sector stood at 32 per cent in the overall leasing.

Moreover, government-led infrastructure projects and policy initiatives, such as the Production Linked Incentive scheme and Make in India 2.0, have significantly strengthened the manufacturing sector, resulting in a heightened demand for warehousing space from E&M companies.

During Q2 2025, I&L leasing witnessed a significant 86 per cent YoY increase to 14.6 MSF. The third-party logistics (3PL) sector continued to account for the highest share in I&L leasing during Q2 2025 at 33 per cent.

Leasing from e-commerce players during the period increased significantly, accounting for a 24 per cent share compared to 9 per cent during the same period last year.

In April-June, the share of I&L leasing by corporates from the APAC, Americas and EMEA regions rose to 43 per cent of the total leasing compared to 19 per cent in Q2 2024.

Among the three regions, APAC-based companies recorded their highest space take-up at 2.7 MSF during Q2 2025 (up from 0.6 MSF in Q2 2024), followed by American and EMEA-based firms at 1.9 MSF and 1.7 MSF, respectively.

In H1 2025, I&L supply stood at 16.7 MSF. Bengaluru, Chennai and Mumbai emerged as the key contributors to this supply addition, collectively accounting for 57 per cent of the total supply during this period. 

Among cities, during H1 2025, Delhi-NCR led the demand with an absorption of 7.3 MSF, followed by Bengaluru at 4.0 MSF and Hyderabad at 3.6 MSF. Cumulatively, the three cities accounted for almost 55 per cent of the leasing volume.

Completions of I&L developments are expected to sustain momentum owing to the launch of several high-profile projects backed by institutional investors.

“The dominance of 3PL and e-commerce, which together drove over half of H1 demand, underscores how rapidly evolving consumer expectations and supply chain optimisation are reshaping the landscape,” said Anshuman Magazine, Chairman and CEO, India, Southeast Asia, Middle East and Africa, CBRE, said.

“We foresee the next wave of growth being defined by premium, sustainable and tech-enabled facilities alongside accelerated expansion into Tier 2 cities to tap into underserved markets. This convergence of institutional capital, occupier demand and infrastructure investment is setting the stage for a transformative decade for India’s logistics ecosystem.”

Ram Chandnani​, MD, leasing, CBRE India, said, “The robust growth in leasing activity, coupled with sustained institutional investments in quality assets, reflects the confidence of both occupiers and developers in India’s I&L sector.”

As occupiers focus on expanding their reach, particularly into Tier 2 cities, and developers prioritise sustainable and state-of-the-art facilities, “we foresee a continued transformation in how warehousing and logistics networks are planned and executed”.

I&L Outlook 2025

• Following a strong first half of 2025, the report projects robust warehousing demand for the upcoming quarters. 3PL, e-commerce and retail sectors are likely to be the primary drivers of this space take-up as they aggressively pursue shorter delivery timelines and re-evaluate their supply chain models.
• Rentals: The ‘flight-to-quality’ trend and strong demand for compliant assets, especially in core markets (Delhi-NCR, Mumbai and Bengaluru), are leading to an increase in the rental differential between investment-grade and sub-investment-grade assets.
• As the demand for premium, sustainable and state-of-the-art warehouses continues to grow, we expect the 2025 supply pipeline to be led by leading developers, backed by institutional investors.
• Bengaluru, Chennai, Delhi-NCR and Mumbai are projected to be the primary contributors to this new supply. However, project completions could face delays due to challenges such as limited land availability and rising acquisition costs, among other complexities.

Developers are likely to pursue land in peripheral areas, along infrastructure corridors, and through brownfield projects.