Industrial, Warehousing Demand All-Time High; Delhi-NCR, Chennai Lead Demand

New Delhi, July 17, 2025: With about 20 mn sq ft (MSF) of leasing activity in H1 2025 at 33 per cent YoY growth, industrial and warehousing demand across the top eight cities remained robust.

Delhi-NCR and Chennai led the demand, cumulatively accounting for about half of the overall leasing in H1 2025. Interestingly, among the top eight cities, Delhi-NCR, Chennai, Mumbai and Bengaluru saw impressive demand of, at least, 2 MSF during the first half of the year.

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 (Mumbai) at 3.1 MSF, followed by Oragadam (Chennai) at 1.5 MSF.

Trends in Grade A Gross absorption (mn sq ft)

Source: Colliers

Note: Data pertains to Grade A buildings. Absorption does not include lease renewals, pre-commitments and deals where only a letter of intent has been signed.

“During the second quarter of 2025, the industrial and warehousing sector saw about 11 MSF 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,” said Vijay Ganesh, MD, Industrial and Logistics services, Colliers India.

“Delhi-NCR drove around one-fourth of the quarterly demand at 2.5 MSF of Grade A space uptake. The demand in the region was led by large space uptake in the 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 the industrial and warehousing sector. The growth momentum is likely to remain unabated in the forthcoming quarters, setting the stage for a strong performance in 2025,” he added.

3PL continues to dominate demand in H1 2025; leasing by other segments on the rise

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 was also notable, with each segment accounting for 2-4 MSF of space take-up, during H1 2025.

“The industrial and warehousing sector witnessed strong space uptake in the first half of 2025 with around 20 MSF 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,” said Vimal Nadar, National Director and Head of Research, Colliers India.

“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 the industrial and warehousing sector through the rest of 2025.”

Large-sized deals account for 51% of gross leasing across the top 8 cities

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, the e-commerce and engineering segments also continued to witness large warehousing space requirement. At the city level, Delhi-NCR, followed by Mumbai, dominated large-sized deals during H1 2025.

New supply also remains strong in H1 2025, rises by 11% on an annual basis

The first six months of 2025 saw a new supply to the tune of 19 MSF, 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 cognisance of healthy demand across major cities and the business environment, developers have been infusing high-quality warehousing facilities replete with technologically advanced features.

Moreover, in line with demand trends, Delhi-NCR and Chennai accounted for the bulk of new supply during H1 2025. These two cities cumulatively contributed close to half of the new supply across the top eight cities of the country. 

Notably, Q2 2025 witnessed 10 MSF of completions in top eight cities of the country, an eight per cent YoY rise. Q2 2025 also marked the highest quarterly supply infusion over the last few quarters. Upcoming quarters are also likely to witness significant influx of Grade A supply with new supply expected to reach about 35-40 MSF by the end of the year.

Trends in Grade A Supply (mn sq ft)

Source: Colliers

Note: Data pertains to Grade A buildings

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