India’s industrial and warehousing sector has witnessed an impressive surge in demand, with leasing activity in the top eight cities reaching 9 million square feet in the first quarter of 2025, reflecting a 15% year-on-year increase.
The robust performance highlights the sector’s resilience and expanding opportunities, driven by a surge in demand from key industries such as engineering and e-commerce.Delhi-NCR and Chennai emerged as the dominant markets, together accounting for nearly 57% of total leasing activity. Delhi-NCR, in particular, recorded significant interest in Grade A industrial and warehousing spaces, bolstered by the growing demand from e-commerce and engineering companies. Chennai, alongside Bengaluru, has seen considerable leasing activity from the engineering sector, making it a key player in the industrial space in India.The engineering sector led the way, securing around 25% of the total demand, making it the largest contributor to leasing activity in Q1 2025. The e-commerce sector closely followed, accounting for 21% of the total leasing, surpassing the traditionally dominant Third Party Logistics (3PL) segment. This shift underscores the growing importance of digital retail and its space requirements.
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In terms of large transactions, the quarter saw a significant number of deals over 200,000 square feet, which represented 48% of total leasing demand. These large deals were predominantly driven by e-commerce, engineering, and automobile sectors, marking the increasing scale of operations in India’s industrial and warehousing market.Notably, the automobile sector also demonstrated strong demand, leasing 1.3 million square feet of Grade A industrial space. This reflects a broader trend of growth across multiple sectors, highlighting an uptick in industrial activity that aligns with broader economic indicators in the country.
Moreover, the supply side of the market remains equally promising. In Q1 2025, new supply stood at 9.4 million square feet, reflecting a 16% year-on-year increase. This rise in supply signals renewed developer confidence and strong fundamentals in the industrial and warehousing segment. Developers are showing increased optimism, as the demand for high-quality industrial spaces continues to grow across key sectors.The leasing activity in India’s industrial and warehousing sector points to a vibrant and dynamic market, with increasing contributions from both traditional and emerging sectors. The strong demand, particularly in Grade A spaces, reflects the changing needs of modern industries, as businesses adapt to growth and technological advancements. The rise in leasing activity is a clear indicator of the sector’s crucial role in India’s economic expansion, making it a key area to watch in the coming quarters.
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Engineering and e-commerce lead warehousing demand
