What Drives India's Warehouse Demand with a 42% YoY Growth in H1 2025?
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Synopsis
India's warehousing market is booming! A recent report shows a staggering 42% YoY growth in leasing volumes, driven largely by the manufacturing sector. Discover what this means for the industry and the economy at large.
Key Takeaways
- 42% YoY growth in India's warehousing leasing volumes.
- Manufacturing sector accounts for 45% of transactions.
- Grade A facilities now make up 63% of leased space.
- Vacancy rates have decreased to 12.1%.
- Mumbai and Pune are leading in demand.
New Delhi, Aug 14 (NationPress) The warehousing sector in India has witnessed an impressive 42% Year-on-Year (YoY) increase in leasing activity, reaching 32.1 million square feet (mn sq ft) across the top eight markets during the first half of 2025 (H1 2025), according to a report released on Thursday.
This significant uptick can be attributed to the manufacturing sector, which experienced a remarkable 71% YoY growth in space absorption, making up 45% of the overall transactions. This information comes from Knight Frank, a renowned global property consultancy, in their latest findings.
The report also highlights a trend towards higher quality facilities, with 63% of the leased space classified as Grade A, an increase from 54% in the previous year.
Overall, the national stock surpassed 500 mn sq ft in H1 2025, with Grade A assets comprising 75% of the new supply. Additionally, vacancy rates decreased from 13.1% to 12.1% as demand outpaced supply, as stated in the report.
The manufacturing sector stood out as the primary occupier, accounting for 45% of total transactions, a notable increase compared to earlier periods.
Leasing in this sector reached 14.6 mn sq ft, marking a 71% YoY increase in H1 2025. Notably, Mumbai and Pune together absorbed 44% of this space, driven by key players such as SKS Fasteners, RenewSys India, Godrej and Boyce, and Lupin, as noted in the report.
Third-party logistics (3PL) companies took up 8.7 mn sq ft (making up 27% of the market share), reflecting a 30% YoY growth, with Mumbai accounting for 35% of the sector’s transaction volume, followed by NCR and Pune.
While the e-commerce sector is no longer the leading player, it made a robust comeback with 3.3 mn sq ft, marking a 61% increase from the previous year and now representing 10% of the total activity, according to the report.
“The substantial increase in transaction volumes within the industrial and warehousing sectors showcases the robust growth of India's manufacturing and consumption landscape. The 71% YoY rise in manufacturing-driven activity underscores the country’s emergence as a key production hub amidst global shifts,” stated Shishir Baijal, Chairman and Managing Director of Knight Frank India.
The report indicated that transaction activity rose in all cities except Kolkata.
Mumbai led with 7.5 mn sq ft, reflecting a 63% YoY increase. Pune and Chennai saw growth rates of 76% and 135%, respectively, while the Ahmedabad market reached a record half-yearly total of 3.6 mn sq ft.
Similarly, Bengaluru experienced a 72% YoY growth, with 65% of its leasing volume driven by manufacturing sector tenants—marking the highest share for the city since H1 2023, according to the report.
Point of View
I observe a significant transformation in India's warehousing sector, reflecting a robust economic shift towards manufacturing. This growth illustrates India's potential as a competitive production hub on the global stage, aligning with national interests and economic strategies.
NationPress
19/08/2025
Frequently Asked Questions
What is driving the growth in India's warehousing sector?
The primary driver of growth in India's warehousing sector is the manufacturing industry, which has seen a substantial increase in space uptake, accounting for 45% of total transactions.
What are Grade A facilities?
Grade A facilities are high-quality warehouses that meet certain standards of construction and management, and they have become increasingly popular within the market, now representing 63% of leased space.
How has vacancy changed in the warehousing market?
Vacancy rates in the warehousing market have decreased from 13.1% to 12.1%, indicating that demand is outpacing supply.
Which cities are leading in warehousing demand?
Mumbai and Pune are the leaders in warehousing demand, absorbing 44% of the total space leased in H1 2025.
What is the outlook for the e-commerce sector in warehousing?
The e-commerce sector, while not the dominant player, is rebounding with a 61% increase in leased space, indicating a resurgence in this segment.
