India’s warehousing and industrial real estate sector continues to fire on all cylinders, driven by manufacturing expansion, supply chain diversification, and a sharp rebound in e-commerce. According to Knight Frank India’s Q3 2025 Industrial and Warehousing Market Report, leasing activity touched 17.1 million sq ft during the quarter — a 16% year-on-year jump — while year-to-date (YTD) volumes surged 32% to 49.2 million sq ft, putting the sector on track for another record-breaking year.

Manufacturing Takes the Lead

Manufacturing was the undisputed growth driver in India’s warehousing market this quarter.

• 44% of total Q3 2025 transactions came from the manufacturing sector (excluding FMCG/FMCD).
• Leasing activity from manufacturing occupiers rose 56% YoY during the first nine months of 2025.
• The sector continues to benefit from India’s Make-in-India momentum, PLI schemes, and reshoring of supply chains from China and other Asian hubs.

“India’s industrial and warehousing landscape continues to strengthen on the back of manufacturing expansion, supply chain diversification, and improving logistics efficiency,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.

3PL and E-Commerce Drive Momentum

While manufacturing led demand, 3PL (third-party logistics) and e-commerce occupiers were close behind:

• 3PL operators absorbed 27% of total space YTD, up 17% YoY as companies increasingly outsourced storage and distribution.
• E-commerce leasing surged 137% YoY in Q3, reaching 2.5 million sq ft, its highest level since early 2023.
• The rebound reflects festive-season inventory stocking, faster delivery expectations, and growth in Tier II & III city consumption.

Mumbai and NCR: The Growth Champions

Among India’s top warehousing markets, Mumbai and NCR emerged as standout performers, contributing nearly 30% of total national volumes.

Key highlights:

• Mumbai:
  • Recorded a 123% jump in quarterly leasing and 75% YTD growth, touching 10 million sq ft — the highest in three years.
  • Contributed 20% of India’s total warehousing activity in 2025 so far.
  • Demand surged across Bhiwandi, Taloja, and Navi Mumbai, driven by strong manufacturing and logistics occupiers.
• Delhi NCR:
  • Leasing grew 93% YoY in Q3 and 50% YTD, reaching 8.8 million sq ft.
  • Driven by the expansion of automotive and 3PL hubs across Ghaziabad, Faridabad, and Sohna.

Other top-performing cities — Chennai, Pune, and Bengaluru — also reported robust leasing, each hitting their highest YTD volumes in three years. Chennai, in particular, saw 62% YoY growth, driven largely by manufacturing occupiers accounting for 62% of local demand.

Warehousing Supply and Quality Shift

Knight Frank notes that India’s total industrial and warehousing stock now stands at 530 million sq ft across the top eight cities.

• 17.5 million sq ft of new supply came online in Q3 2025 alone.
• Grade A spaces accounted for 84% of new supply, underscoring the growing emphasis on automation, ESG compliance, and safety standards.
• Vacancy rates stood at 12.2% overall, but Grade A assets saw slightly higher vacancy (13%) due to fresh speculative supply being added.

Rents on the Rise

Steady demand and premium-quality projects have led to rents increasing by 3–4% YoY across major cities.

• Mumbai’s average rentals rose 4% YoY to ₹24.9 per sq ft per month.
• Chennai, Bengaluru, and Pune also witnessed similar upward movement.
  Developers are focusing on institutional-grade parks with improved connectivity and compliance, keeping rents firm despite strong new supply.

What’s Driving the Sector’s Next Phase

According to Knight Frank, three major shifts are shaping the next phase of India’s industrial and warehousing growth:

1. Manufacturing resurgence under government-led incentives such as PLI and Make in India.
2. Supply chain diversification, as companies relocate or expand manufacturing and storage bases to India.
3. E-commerce and 3PL optimization, boosting warehousing footprints closer to consumption centers.

With these drivers, India’s logistics and industrial real estate is evolving into one of the most resilient growth stories of the decade.

Expert Outlook

“Demand remains broad-based, with Grade A facilities now accounting for 61% of total occupier take-up. The sector is poised for long-term, high-quality growth supported by strong business sentiment and policy stability,” added Shishir Baijal, CMD, Knight Frank India.

The outlook remains optimistic as manufacturing continues to gain traction and India cements its position as a global supply chain alternative, reinforcing warehousing as a vital link in the country’s infrastructure-led growth story.

Also Read: The India growth story: Office, Residential, and warehousing sectors outperform the industry

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