The momentum comes amid continued diversification of global supply chains and expansion of domestic manufacturing and distribution networks, supporting demand for Grade A warehousing assets across key markets.
The sector recorded transactions of 19.3 million sq ft across top 8 markets in the January-March quarter, registering a 15% year-on-year increase despite global supply chain disruptions and higher logistics costs, showed data from Knight Frank India.
The transaction volume marked the second-highest quarterly warehousing absorption since 2023, supported by continued occupier demand from manufacturing and third-party logistics (3PL) companies.
“The strong performance of the warehousing sector highlights the structural resilience of India’s logistics ecosystem despite heightened global supply chain disruptions. Manufacturing continues to anchor demand, supported by sustained diversification of global supply chains and India’s growing role as a production hub,” said Shishir Baijal, International Partner, CMD, Knight Frank India.
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Mumbai emerged as the largest warehousing market during the quarter with transactions rising 66% year-on-year to 7.4 million sq ft from 4.4 million sq ft a year earlier. Ahmedabad and Kolkata recorded increases of 92% and 440%, respectively, while Bengaluru and the National Capital Region (NCR) posted growth of 27% and 8%.
Pune and Chennai, however, witnessed declines of 31% and 68%, respectively, due to supply-side constraints and normalisation following higher activity in previous quarters. Hyderabad recorded a marginal 5% decline in leasing activity to 1.1 million sq ft.Manufacturing companies remained the largest occupiers of warehousing space, accounting for 48% of total leasing during the quarter. The segment leased 9.3 million sq ft, registering a 17% year-on-year increase.
The 3PL sector accounted for 33% of total transactions with leasing activity of 6.4 million sq ft, recording a 64% annual increase. Mumbai and NCR accounted for a significant share of 3PL demand during the quarter.
According to Baijal, the sharp acceleration in 3PL leasing reflects the shift in how companies are optimising their logistics operations through outsourcing and consolidation.
While demand fundamentals remain robust, the sector’s next phase of growth will hinge on the timely creation of high-quality supply, particularly in the face of persistent land and regulatory constraints, he added.
Retail leasing rose 115% year-on-year with the segment accounting for 4% of overall transactions. The miscellaneous category, including telecom, real estate and document management occupiers, accounted for 6% of total leasing activity. In contrast, e-commerce leasing declined 71%, while FMCG demand fell 87%.
India’s industrial and warehousing stock across the top eight cities stood at 568 million sq ft during the quarter. Mumbai accounted for 32% of total stock, followed by NCR at 21%.
Vacancy levels remained stable at 11.1% during the quarter, supported by measured supply additions and sustained leasing activity. Grade A assets accounted for 46% of total inventory compared with 42% a year earlier.
Rental values increased across all eight markets due to occupier demand and rising land costs. Chennai recorded the highest rental growth at 7% year-on-year, while Pune remained the most expensive market at Rs 28.5 per sq ft per month. Mumbai rentals rose to Rs 26 per sq ft per month, while NCR rentals increased to Rs 22.3 per sq ft per month.
