Developer confidence in industrial & warehousing market improves
With about 20 million sq ft of leasing activity in H1 2025, at 33% YoY growth, industrial & warehousing demand across the top eight cities remained robust with Delhi NCR and Chennai leading the market, cumulatively accounting for about half of the overall leasing during the period, according to Colliers (NASDAQ: CIGI) (TSX: CIGI).
Interestingly among the top eight cities, Delhi NCR, Chennai, Mumbai and Bengaluru saw impressive demand of at least 2 million 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 & industrial sheds, contributing to about 32% 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 million sq ft followed by Oragadam (Chennai) at 1.5 mn sq ft.
“During the second quarter of 2025, industrial & warehousing sector saw about 11 million sq ft of demand across the top eight cities, a 52% rise YoY. Notably, Q2 recorded the highest quarterly gross absorption in the last few years,” said Vijay Ganesh, Managing Director, Industrial & Logistics Services, Colliers India https://www.nseindia.com/.
“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% demand share in Q2 2025, continued to drive industrial & 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,” he said on 21 July.
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 https://www.credai.org/home/.
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 million sq ft, an 11% YoY rise. 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 cognizance of healthy demand across major cities and business environment, developers have been infusing high quality warehousing facilities replete with technologically advanced features https://sbi.com.in/.
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 https://www.bseindia.com/.
Notably, Q2 2025 witnessed 10 million sq ft of completions in top eight cities of the country, an 8% 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 million sq ft by the end of the year, according to the report by Colliers. Fiinews.com
