India's warehousing demand up 33% in H1 2025 to 20 mn sq ft: 3 key growth drivers

During the second quarter of 2025, the industrial & warehousing sector saw about 11 mn sq ft of demand across the top eight cities, a 52% YoY rise, taking the overall leasing activity to about 20 mn sq ft in H1 2025. This translated into 33% YoY growth in the industrial & warehousing sector across the top eight cities as demand remained robust, with Delhi NCR and Chennai grabbing about half of the overall leasing in H1 2025. Interestingly, among the top eight cities, Delhi NCR, Chennai, Mumbai, and Bengaluru saw an impressive demand of at least 2 mn sq ft 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 a 32% share in overall demand during the first half of the year. Demand from most occupier segments, including 3PL, engineering, e-commerce, automobile, and retail firms, rose significantly during H1 2025. At the micromarket level, warehousing space uptake was the highest in Bhiwandi (Mumbai) at 3.1 mn sq ft followed by Oragadam (Chennai) at 1.5 mn sq ft.

“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 mn sq ft of Grade A space uptake. The demand in the region was led by large space uptake in Farukhnagar and Kulana micromarkets. Cities like Delhi NCR, Mumbai, and Chennai, with 60% demand share in Q2 2025, continued to drive the industrial & warehousing sector in India. The growth momentum is likely to remain unabated in the forthcoming quarters,” says Vijay Ganesh, Managing Director, Industrial & Logistics Services, Colliers India.

3 key trends shaping the industrial & warehousing sector in H1 2025:

3PL continues to dominate demand in H1 2025: 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 automobiles was also notable, with each segment accounting for 2-4 mn sq ft of space uptake during H1 2025.

“While 3PL players continue to lead overall demand, engineering, e-commerce, and automobiles segments have been steadily gaining traction over the last few quarters. Each of these three segments accounted for around 10-20% of the Grade A space uptake in H1 2025. It also sets a strong foundation for continued growth in the industrial & warehousing sector through the rest of 2025,” says Vimal Nadar, National Director & Head of Research, Colliers India.

Large-sized deals account for 51% of gross leasing: 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 requirements. At the city level, Delhi NCR, followed by Mumbai, dominated large-sized deals during H1 2025.

New supply rises by 11% on an annual basis: The new supply was almost in line with the strong leasing activity during H1 2025, indicating improved developer confidence in the industrial & warehousing market. Taking cognisance of healthy demand, developers have been infusing high-quality warehousing facilities replete with technologically advanced features. Delhi NCR and Chennai accounted for close to half of the new supply across the top eight cities. Notably, Q2 2025 witnessed 10 mn sq ft of completions in top eight cities of the country, an 8% YoY rise.