Logistics and manufacturing firms consolidate space at scale
NEW DELHI, Jan 14 (The CONNECT) — India’s industrial and warehousing market hit a multi-year high in 2025, powered by a surge in large-format leasing as transactions of 200,000 sq ft and above accounted for 45% of total Grade A absorption, signalling a decisive shift toward scale-led expansion, according to Colliers India.
Overall Grade A leasing across the top eight cities rose 16% year-on-year to 36.9 million sq ft, with demand accelerating sharply in the final quarter. After a muted third quarter, Q4 leasing climbed 30% year-on-year to 10.4 million sq ft, driven primarily by logistics hubs in Chennai and Pune, which together accounted for more than half of quarterly absorption.
The dominance of large-ticket deals reflects changing occupier strategies, particularly among third-party logistics (3PL), e-commerce and engineering firms that are consolidating operations into fewer, larger warehouses to improve efficiency, speed and cost control. Third-party logistics players alone leased around 12 million sq ft, accounting for nearly one-third of total demand in 2025.
Delhi NCR emerged as the largest market for the year with a 24% share of total leasing, followed closely by Chennai at 22%. Both markets recorded more than 8 million sq ft of annual absorption. Pune and Mumbai followed, each posting close to 5 million sq ft of Grade A leasing, reinforcing their position as core industrial hubs.
“Large deals defined the market in 2025, particularly in the last quarter, as occupiers committed to long-term capacity,” said Vijay Ganesh, Managing Director, Industrial & Logistics Services at Colliers India. “This momentum pushed Grade A demand to nearly 37 million sq ft, the highest seen in recent years, even as developers stepped up supply in anticipation of sustained growth.”
At the micro-market level, Bhiwandi in Mumbai led the country with about 4.9 million sq ft of Grade A uptake during the year, followed by Chakan–Talegaon in Pune and Oragadam in Chennai, each crossing 2.5 million sq ft. These clusters benefited from established manufacturing ecosystems, proximity to ports and highways, and availability of large, institutional-grade assets.
Deal-size trends varied by sector. Within e-commerce, about 61% of leasing in Q4 came from large-format transactions, reflecting the space requirements of fulfilment centres and last-mile delivery hubs. In contrast, FMCG and retail occupiers leaned toward mid-sized warehouses of 100,000–200,000 sq ft, aligned with the rise of hyperlocal distribution models.
Supply responded in tandem with demand. Developers delivered 41.7 million sq ft of new Grade A industrial and warehousing space in 2025, a 15% increase over the previous year and the highest level recorded in recent years. Delhi NCR alone accounted for nearly 30% of annual completions, while Q4 supply rose 40% year-on-year to around 13 million sq ft, highlighting strong developer confidence.
Despite the influx of new stock, overall vacancy levels remained stable at around 16% at the end of 2025. In high-activity micro-markets where large deals absorbed space quickly, average rentals rose by 5–10%, indicating tightening conditions for prime assets.
“Delhi NCR and Chennai together contributed over 45% of total leasing in 2025, while Pune and Mumbai added another 25%,” said Vimal Nadar, National Director and Head of Research at Colliers India. “With continued policy focus on manufacturing and logistics infrastructure, these four markets are likely to account for 70–80% of industrial and warehousing demand in 2026, led by large-format, Grade A facilities.”
