The Indian warehousing and logistics sector entered a phase of recalibration in 2025 after experiencing unprecedented growth in 2024. Occupiers, particularly from e-commerce, manufacturing, and third-party logistics (3PL) segments, had rapidly expanded capacity in the post-COVID period to strengthen supply chains, support rising consumption, and ensure faster delivery timelines. By 2025, much of this capacity had been created, prompting companies to pause large-scale expansion and focus on optimising existing networks.
According to Vestian, absorption fell to 38.7 million sq. ft in 2025 from 44.9 million sq. ft in 2024, a 14 percent year-on-year decline. Despite this moderation, absorption remained 84 percent higher than 2020 levels, underlining the sector’s strong structural growth.
“This slowdown is a natural adjustment following an intense growth cycle, rather than a sign of weakening demand,” said Shrinivas Rao, FRICS, CEO of Vestian. “Occupiers shifted their focus to consolidation and Grade A assets, and the sector remains well positioned for a rebound in the coming year.”
City-Wise Trends Show Varied Recovery
Mumbai: Leading the absorption charts, Mumbai recorded 15.2 million sq. ft in 2025, despite an 18 percent decline from the previous year. Its share in pan-India absorption dropped slightly from 41 percent to 39 percent. Average rentals, however, rose sharply by 16 percent to Rs. 21.0 per sq. ft per month, reflecting ongoing demand for prime warehousing assets.
Pune: Pune remained the second-largest market with 6.4 million sq. ft absorbed, down nearly 51 percent from 13.0 million sq. ft in 2024. This correction follows an exceptionally strong year. Despite lower leasing volumes, rentals surged 22 percent to Rs. 28.0 per sq. ft per month, making Pune India’s most expensive warehousing market.
NCR: The National Capital Region (NCR) saw absorption rebound by 38 percent to 5.5 million sq. ft. Its share of pan-India absorption increased from 9 percent to 14 percent, with rentals appreciating 4 percent to Rs. 23.0 per sq. ft per month.
Hyderabad: Hyderabad’s absorption declined 31 percent to 2.2 million sq. ft, with its share falling slightly from 7 percent to 6 percent. Despite subdued leasing activity, rentals rose by 10 percent to Rs. 20.8 per sq. ft per month.
Kolkata: Kolkata emerged as a bright spot, with absorption surging 175 percent year-on-year to 2.2 million sq. ft, tripling its pan-India absorption share to 6 percent. Rentals in the city increased moderately by 6 percent to Rs. 22.0 per sq. ft per month.
Bengaluru and Chennai: Both cities experienced healthy growth, with Bengaluru reporting 30 percent higher absorption at 3.5 million sq. ft, and Chennai up 39 percent to 3.6 million sq. ft. Rental values in both cities remained largely stable, reflecting balanced demand and supply dynamics.
A Year of Consolidation and Network Optimisation
The slowdown in absorption across several key cities is largely attributed to occupiers pausing expansion after four consecutive years of strong growth. Many players are now focused on consolidating their networks, optimising operations, and upgrading to Grade A facilities.
“E-commerce, manufacturing, and 3PL players are consolidating their footprint rather than chasing volume,” said Rao. “This strategic focus ensures operational efficiency while keeping the sector ready for the next growth phase.”
Outlook for 2026
Looking ahead, Vestian expects the warehousing and logistics sector to regain momentum in 2026. Factors such as robust domestic consumption, improved macroeconomic stability, and easing of financing conditions are likely to support renewed leasing activity.
Industry estimates suggest that annual absorption could reach 40–45 million sq. ft, signalling a return to strong demand levels. Analysts also expect rental growth to continue in key markets, particularly for premium, well-located Grade A assets.
As the sector recalibrates after a high-growth phase, the focus is shifting from expansion to efficiency, setting the stage for sustainable, long-term growth in India’s warehousing and logistics landscape.
