Bangalore, India, 23 April 2025: With 9 million sq ft of leasing in Q1 2025 at a 15% YoY growth, industrial & warehousing demand across the top eight cities remained robust. Delhi NCR and Chennai led the demand, cumulatively accounting for around 57% of the overall leasing in Q1 2025. The demand for Grade A industrial & warehousing space was particularly impressive in Delhi NCR; the city has already witnessed about half of the leasing activity of 2024 in the first quarter of 2025 alone. Interestingly, across the top eight cities, engineering sector drove demand this quarter, contributing to about 25% of the overall industrial & warehousing space uptake, followed by e-commerce with 21% share. Both these sectors have surpassed the demand from Third Party Logistics (3PL) players, the usual frontrunner. While Chennai and Bengaluru saw strong traction from occupiers in the engineering space, demand from e-commerce players remained significant in Delhi NCR and Mumbai.
At a micro market level, Bhiwandi in Mumbai led leasing activity in the first quarter with about 1.0 million sq ft of demand, followed by Luhari (0.9 mn sq ft) in Delhi NCR and NH-16 (0.7 mn sq ft) in Chennai. These three micro markets accounted for significant leasing share in their respective cities during the quarter.
Trends in Grade A Gross absorption (million sq ft)
| City | Q1 2024 | Q4 2024 | Q1 2025 | YoY change | QoQ change |
| Ahmedabad | 0.3 | 0.6 | 0.6 | 100% | 0% |
| Bengaluru | 0.5 | 1.4 | 0.8 | 60% | -43% |
| Chennai | 1.9 | 0.7 | 2.0 | 5% | 186% |
| Delhi NCR | 1.4 | 1.1 | 3.1 | 121% | 182% |
| Hyderabad | 0.2 | 0.3 | 0.3 | 50% | 0% |
| Kolkata | 0.3 | 1.6 | 0.5 | 67% | -69% |
| Mumbai | 1.9 | 0.8 | 1.0 | -47% | 25% |
| Pune | 1.3 | 1.5 | 0.7 | -46% | -53% |
| TOTAL | 7.8 | 8.0 | 9.0 | 15% | 13% |
Engineering and e-commerce sectors emerged as key demand drivers
Engineering and e-commerce players drove the bulk of leasing during the quarter, together accounting for about 46% of the demand. With about 2.2 million sq ft of leasing, engineering firms alone accounted for about one-fourth of the Grade A industrial & warehousing demand in Q1 2025. The sector saw over 2X times growth in leasing activity on an annual basis, led by robust demand in Chennai and Bengaluru. E-commerce also saw close to 2 million sq ft of leasing, led by Delhi NCR and Mumbai. Bolstered by institutional capital deployment, improved last-mile delivery, and increasing consumer trust, e-commerce in India is expected to maintain a strong upward trajectory in the coming years. This would further fuel demand for warehousing spaces across Tier I and II markets in the country.
“The strong industrial & warehousing space uptake in the first quarter of 2025 was marked by robust demand across diverse occupier sectors. Engineering and e-commerce sectors emerged as key demand drivers, followed by 3PL, with each recording close to 2 million sq ft of quarterly demand or more. Automobile players also picked up significant Grade A industrial & warehousing space at 1.3 million sq ft. These are healthy signs of overall growth, reflecting broad-based demand which aligns with domestic macro-economic indicators.” says Vijay Ganesh, Managing Director, Industrial & Logistics Services, Colliers India.
Large sized deals account for about half of the industrial & warehousing space demand
During Q1 2025, large deals (>200,000 sq ft) accounted for 48% of the demand at 4.3 million sq ft. These larger deals were driven by e-commerce companies, followed by engineering and automobile firms. At the city level, Delhi NCR (1.9 mn sq ft) followed by Chennai (1.0 mn sq ft) dominated the proportion of large-sized deals.
“With about 3.1 million sq ft of industrial & warehousing demand in Q1 2025, Delhi NCR saw the highest quarterly leasing in the last 2-3 years. The surge in the region was led by Grade A space uptake in Luhari and Tauru Road micro markets. In terms of occupiers, e-commerce players accounted for around one-third of the quarterly demand in the region, followed by the automobile & retail sectors. Overall, traditionally strong markets like Delhi NCR and Chennai have provided a strong start to the year. The demand momentum is likely to continue in the upcoming quarters, setting the tone for a strong performance in 2025.” says Vimal Nadar, Senior Director & Head of Research, Colliers India.
New supply in tandem with leasing during the quarter
The first quarter of 2025 saw new supply to the tune of 9.4 million sq ft, a 16% YoY rise. New supply was almost in line with the strong leasing activity during the quarter, indicating improved developer confidence in the industrial & warehousing market. Moreover, in line with demand trends, Delhi NCR and Chennai accounted for the bulk of new supply during the quarter. These two cities cumulatively contributed close to half of the new supply across the top eight cities of the country.
Vacancy levels, however, increased by 250 basis points on account of churns & exits and stood at around 13% at the end of Q1 2025. Average rentals meanwhile rose in most cities, fueled by strong space uptake in prominent industrial clusters.
Trends in Grade A Supply (million sq ft)
| City | Q1 2024 | Q4 2024 | Q1 2025 | YoY change | QoQ change |
| Ahmedabad | 0.3 | 1.5 | 0.5 | 67% | -67% |
| Bengaluru | 1.4 | 1.9 | 0.9 | -36% | -53% |
| Chennai | 1.3 | 0.6 | 2.0 | 54% | 233% |
| Delhi NCR | 2.3 | 2.1 | 2.5 | 9% | 19% |
| Hyderabad | 0.6 | 0.3 | 0.2 | -67% | -33% |
| Kolkata | 0.3 | 0.5 | 0.5 | 67% | 0% |
| Mumbai | 1.0 | 1.1 | 1.9 | 90% | 73% |
| Pune | 0.9 | 1.1 | 0.9 | 0% | -18% |
| TOTAL | 8.1 | 9.1 | 9.4 | 16% | 3% |
