Industrial & warehousing demand at all-time high, 20 million sq. ft. in H1 2025

In H1 2025, the industrial and warehousing sector in India demonstrated strong growth, with Delhi NCR and Chennai leading the way, accounting for almost half of the 20 million sq. ft. leased. The sector saw a 33% increase YoY, with Q2 alone experiencing 11 million sq. ft. of leasing activity, representing the highest quarterly gross absorption in recent years. This quarter was led by Delhi NCR, propelled by significant growth in Farukh Nagar and Kulana. Third-Party Logistics (3PL) companies continued to be the primary contributors, representing 32% of overall demand, while the engineering, e-commerce, and automotive sectors trailed closely with significant space absorption ranging from two to four million sq. ft each. Significantly, Grade A warehouse spaces comprised the majority of leasing deals, indicating tenant preference for high-quality facilities. Supply-side trends remained robust, as developers added 19 million sq. ft of new space in H1 2025, reflecting an 11% increase compared to the previous year. The period from April to June alone represented 10 million sq. ft of completions, marking the highest quarterly supply increase in numerous quarters. Delhi NCR and Chennai remained at the forefront of new developments, jointly accounting for fifty percent of this supply. Approximately 50% of leasing agreements consisted of substantial transactions exceeding 2,00,000 sq. ft, particularly focused in Delhi NCR and Mumbai. Despite the overall vacancy rate remaining stable at 13.5%, rents in vital micro-markets rose sharply because of persistent demand and the introduction of premium spaces with modern amenities. Analysts expect ongoing expansion in the industry, supported by widespread demand and strong performance across various tenant categories. Developers are expected to enhance Grade A capacity even more, forecasting total new supply to attain 35–40 million sq. ft by the end of 2025.