India’s warehousing demand records 32.1 million sq ft in H1

India’s warehousing sector recorded a 42 per cent YoY surge in leasing volumes to 32.1 million sq ft across the top eight markets.

This sharp rise in demand was led by the manufacturing sector, which saw a 71 per cent YoY growth in space uptake, accounting for 45 per cent of the total transactions, according to a survey by Knight Frank India.

The report highlights the expanding role of India as a resilient, consumption-led, and manufacturing-driven economy whose industrial and warehousing market is benefiting from global trade realignments, government-led infrastructure and PLI investments.

The increasing focus on higher grade facilities is also apparent. Transaction volumes reflect this shift as 63% of leased space was Grade A, up from 54% a year ago.

Pan-India stock exceeded 500 million sq ft in H1 2025, with Grade A assets constituting 75% of new supply; vacancy dropped from 13.1% to 12.1% as supply lagged demand.

The manufacturing sector emerged as the leading occupier during H1 2025, accounting for 45% of all transactions, a significant leap from prior periods. The sector’s leasing volume reached 14.6 million sq ft, up 71% YoY in H1 2025. Notably, Mumbai and Pune together absorbed 44% of this space, led by prominent companies such as SKS Fasteners, RenewSys India, Godrej & Boyce, and Lupin.

The shift of global supply chains, government support through PLI schemes, and India’s competitiveness in energy, chemicals, automotive, and heavy engineering has positioned the country as a viable manufacturing destination. Interestingly, warehouses are also increasingly being retrofitted to industrial specifications to capitalise on the upswing in manufacturing activity.

3PL firms absorbed 8.7 million sq ft (27% share), rising 30% YoY, with Mumbai constituting 35% of the sector’s transacted volumes followed by NCR, and Pune. E-commerce, while no longer the dominant sector, made a strong comeback with 3.3 million sq ft, a 61% increase over the previous year, now accounting for 10% of all activity.

Transaction volumes grew across all cities except Kolkata. Mumbai led with 7.5 million sq ft, up 63% YoY. Pune and Chennai registered 76% and 135% growth respectively, led by strong manufacturing uptake. Ahmedabad and Bengaluru also recorded notable expansion.

The Ahmedabad market reached a new half-yearly high of 3.6 million sq ft, driven by manufacturing firms which took up 48% of the area transacted. Similarly, Bengaluru also saw a 72% YoY surge, with 65% of leasing volume led by manufacturing sector occupiers—the highest share for the city since H1 2023.

While the office market has almost reached the one billion sq ft mark, the warehousing and industrial market crossed 513 million sq ft in H1 2025, with 26.9 million sq ft becoming operational across the top eight markets. However, this trailed demand during the period, helped lower the pan-India vacancy to 12.1%, from 13.1% in H1 2024.

Grade A properties constituted 75% of the new supply, reflecting developer response to occupier preference for high-specifications, ESG-aligned spaces. Grade A vacancy (12.9%) remained higher than Grade B (10.7%), due to speculative development in anticipation of demand.

All primary markets recorded a 3–5% YoY rise in rental values, led by Mumbai at 4.7%, Kolkata at 4.6%, and Pune at 3.8%.

Healthy occupier traction and the rising demand for efficient, automated logistics parks with sustainability features has kept rent growth buoyant across markets.

A 71% YoY rise in manufacturing-led activity highlights the shift toward India as a preferred production hub amid global realignments. The evolving demand profile, backed by infrastructure build-up, policy stability, and rising investor interest in Grade A assets, signals a more mature and future-ready warehousing ecosystem, said Shishir Baijal, CMD, Knight Frank India.

I have given my property for redevelopment and could not travel to India for business purposes. Can I give power of attorney to my uncle to handle this affair? Vivek Pandit, Sharjah.

You can appoint your uncle to handle your affairs for this purpose. As the asset is undergoing redevelopment, you must also apply for its mutation before the concerned authority to have your name registered against the property under development. This is important especially at a time when the asset is undergoing redevelopment.

I have invested in a project in Bengaluru. Is GST applicable to all types of residential projects? Please clarify. Deepak, Dubai.

The impact of GST on residential property depends on the phase of construction, the location as well as the type of project. For example, GST impact will be observed more in case of new launches as compared to near completion projects. Similarly, projects in suburban areas will be more impacted when compared to city-centre projects.