After a sluggish start to the year, India’s warehousing and logistics sector bounced back sharply in the third quarter of 2025, with absorption surging 64% over the previous quarter to touch 9.2 million sq. ft, according to a report by Vestian.
The rebound marks a clear shift in market sentiment, driven by renewed occupier demand and a gradual pickup in leasing activity across major logistics hubs. However, when compared to the record highs of the same period last year, absorption was 36% lower, suggesting that while recovery is underway, the market is still stabilizing after last year’s exceptional performance.
Mumbai Leads the Charge
Mumbai emerged as the top performer, contributing nearly 47% of the total pan-India absorption during Q3 2025. The city witnessed 4.29 million sq. ft of space leased, a 377% jump quarter-on-quarter and 10% higher year-on-year, marking a sharp turnaround after a subdued second quarter.
The revival in Mumbai’s warehousing market was largely driven by renewed occupier activity in Bhiwandi and Panvel, which together accounted for almost 96% of the city’s total absorption. The two micro-markets have become prime logistics destinations owing to their connectivity to the Mumbai Metropolitan Region (MMR) and key transport corridors, making them attractive to e-commerce, retail, and 3PL (third-party logistics) players.
NCR and Chennai Maintain Strong Momentum
The National Capital Region (NCR) ranked second with 1.28 million sq. ft of absorption, registering an 83% rise from the previous quarter, though still down 40% year-on-year. The improvement highlights renewed traction among large occupiers optimizing supply chain networks across Delhi-NCR’s peripheral hubs like Ghaziabad and Farukhnagar.
Meanwhile, Chennai recorded 1.13 million sq. ft of absorption, its highest in the past seven quarters. Leasing activity in the southern hub surged 151% quarter-on-quarter and 38% year-on-year, making Chennai one of the standout performers in 2025. The city’s growing industrial base, supported by automobile, electronics, and logistics players, continues to drive steady demand for Grade-A warehousing facilities.
Kolkata Emerges as a Surprise Performer
The most remarkable turnaround came from Kolkata, where absorption jumped a staggering 950% over the previous quarter and 186% compared to Q3 2024, reaching 1.26 million sq. ft, the city’s highest-ever quarterly absorption. The surge was led by expanding logistics demand in and around Dankuni, spurred by infrastructure improvements and e-commerce expansion into eastern India.
Mixed Trends Across Southern Markets
While some cities surged ahead, others continued to cool off. Pune, once a strong performer, saw absorption fall to 0.64 million sq ft, marking a 31% quarterly and 87% yearly decline. The city has witnessed a steady four-quarter slide in leasing volumes, suggesting a temporary pause in occupier expansion amid limited fresh supply and a high base effect from previous years.
Bengaluru, too, reported a muted quarter with absorption down 94% quarter-on-quarter and 90% year-on-year to just 0.13 million sq ft, the lowest among the top seven markets.
Hyderabad, on the other hand, remained relatively steady with 0.47 million sq. ft of absorption, a 7% rise from Q2 but 14% lower year-on-year. The market continues to see balanced activity, supported by the city’s diversified occupier base.
Sector Outlook: From Correction to Consolidation
According to Shrinivas Rao, FRICS, CEO, Vestian, the rebound in Q3 reflects the sector’s resilience and its growing maturity. “After a subdued previous quarter, the warehousing and logistics sector has shown clear signs of revival, with Mumbai, Kolkata, and NCR leading absorption. The resurgence in occupier demand across key micro-markets, coupled with renewed momentum in the e-commerce and 3PL segments, underscores the sector’s growing depth and diversification,” Rao said.
He added that occupiers are increasingly focusing on network optimization and Grade-A assets, indicating that India’s logistics market is entering a more structured, efficiency-driven growth phase.
A More Stable Growth Path Ahead
The Q3 rebound demonstrates that India’s warehousing and logistics sector is moving from cyclical fluctuations toward sustained, demand-led growth. With e-commerce, retail, and manufacturing players expanding their footprints and occupiers prioritizing strategic locations near consumption hubs, the outlook for the coming quarters remains optimistic.
