THE YEAR LOGISTICS GOT REAL INDUSTRIAL & WAREHOUSING 2025 REPORT CARD

In 2025, India’s industrial and warehousing sector moved decisively from being a secondary to a strategic asset class. The year marked a clear shift towards Grade-A, technology-led, and sustainable industrial and warehousing segment driven by rising institutional capital. Backed by proactive government policies, the manufacturing segment has continued to be the strongest demand driver, accounting for 22 million sq. ft. (29%) of total absorption in 2025, up from 22% in 2024. This is followed by sustained demand from 3PL segment with a 28% overall contribution, FMCG & FMCD with 11% and retail with 6%. The E-Commerce sector has rebounded after years of reduced activity, with its contribution rising from 4% in 2023 to 12% in 2025. Tier-I cities accounted for 78% of total absorption, while Tier-II & III cities took the remaining 22%. On the supply side, Tier-I cities accounted for 82% of the total supply, while Tier-II & III cities contributed 18%, according to International real estate advisory firm, Savills India.

After a subdued previous quarter, the warehousing and logistics sector has shown clear signs of revival in Q3 2025, with Mumbai, Kolkata, and NCR leading absorption.

“Industrial and logistics real estate remains robust, with absorption crossing 76+ Mn SqFt. in 2025, with the manufacturing sector as long-term demand driver. Future growth will be shaped as much by geographic expansion as by scale, with activity spreading across over 20 Tier I and II cities and a growing industrial ecosystem emerging in more than 25 Tier II and III markets. This dispersion is redefining India’s industrial geography, enhancing regional supply chain resilience, and creating enduring opportunities for occupiers, developers, and long-term capital,” said Srinivas N, Managing Director, Industrial and Logistics, Savills India

 Warehousing sector witnessed an absorption of 9.2 Mn sq ft in Q3 2025, rebounding by 64% compared to the subdued previous quarter. Despite this robust growth, the absorption was 36% less when compared to the record level of absorption reported in the same quarter a year earlier. Mumbai contributed the highest to pan-India absorption in Q3 2025, around 47%. In value terms, the city led pan-India absorption with 4.29 Mn sq ft, registering a sharp quarter on-quarter rise of 377% and 10% increase compared to Q3 2024, indicating a revival after a muted previous quarter. The increase in absorption can be attributed to renewed occupier demand in key micro-markets such as Bhiwandi and Panvel, which accounted for nearly 96% of the total absorption in the city.

NCR followed as the second-largest contributor with 1.28 Mn sq ft of absorption, registering an 83% increase over the previous quarter, though it decreased by 40% compared to the same quarter a year earlier. Chennai also witnessed sustained leasing activity with 1.13 Mn sq ft of absorption in Q3 2025, the highest in the past seven quarters. Absorption increased by 151% over the previous quarter and 38% compared to the same period a year earlier. The city emerged as one of the best-performing markets among the southern cities. Kolkata’s leasing activity swelled by 950% over the previous quarter and by 186% compared to Q3 2024, resulting in 1.26 Mn sq ft of absorption in Q3 2025. This is the highest ever absorption recorded in the city.

As the year wraps up, industrial and warehousing realty stand tall as 2025’s most grounded, growth-backed real estate performers.

Hyderabad recorded 0.47 Mn sq ft of absorption in Q3 2025, reflecting a 7% increase over the previous quarter but a 14% decline compared to the same quarter of the previous year. Overall, the city’s absorption remained largely stable during the year. Pune in contrast to its peer cities, saw gradual decline in absorption over the consecutive four quarters, reaching 0.64 Mn sq ft in Q3 2025. In addition, the city’s absorption declined by 31% over the previous quarter and 87% compared to the same quarter a year earlier. The city, which had previously maintained strong leasing momentum, saw a sharp correction this quarter. Bengaluru’s absorption also dropped significantly to 0.13 Mn sq ft, recording a steep 94% (quarterly) and 90% (yearly) decline. This was the lowest absorption among the top seven cities.

Shrinivas Rao, FRICS, CEO, Vestian said, “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. As occupiers focus on network optimization and grade-A assets, India’s warehousing and logistics landscape is reshaping for a stronger performance in the upcoming quarters.”