Knight Frank India in its latest half-yearly report on India’s warehousing market, recorded a surge of y-o-y per cent in leasing volumes to 32.1 million sq ft across the top eight markets in India. This sharp rise in demand was led by the manufacturing sector, which saw a 71 per cent y-o-y growth in space uptake, accounting for 45 per cent of the total transactions.
The report highlights the expanding role of India as a resilient, consumption-led and manufacturing-driven economy, the industrial and warehousing market of which is benefiting from global trade realignments, government-led infrastructure and PLI investments. The increasing focus on higher grade facilities is also apparent, with transaction volumes reflecting this shift at 63 per cent of leased Grade A space – up from 54 per cent a year ago.
Pan-India stock exceeded 500 million sq ft in H1 2025, with Grade A assets constituting 75 per cent of new supply. W, while vacancies dropped from 13.1 per cent to 12.1 per cent, as supply lagged demand.
“The healthy surge in the volumes transacted in the industrial and warehousing market reflects the depth of India’s rapidly expanding manufacturing and consumption base,” affirms Shishir Baijal, chairman & managing director, Knight Frank India. “A 71 per cent y-o-y rise in manufacturing-led activity highlights a shift towards India as a preferred production hub amid global realignments. The evolving demand profile, backed by infrastructure build-up, policy stability and rising investor interest in Grade A assets signals a more mature and future-ready warehousing ecosystem”.
The manufacturing sector emerged as the leading occupier during H1 2025, accounting for 45 per cent of all transactions – a significant leap from prior periods. The sector’s leasing volume reached 14.6 million sq ft, up 71 per cent y-o-y in H1 2025. Notably, Mumbai and Pune together absorbed 44 per cent of this space, led by prominent companies such as SKS Fasteners, RenewSys India, Godrej & Boyce and Lupin.
The shift of global supply chains, government support through PLI schemes and India’s competitiveness in energy, chemicals, automotive and heavy engineering has positioned the country as a viable manufacturing destination. Interestingly, warehouses are also increasingly being retrofitted to industrial specifications to capitalise on the upswing in manufacturing activity.
E-commerce makes a comeback
Also, 3PL firms absorbed 8.7 million sq ft (27 per cent share), rising 30 per cent y-o-y, with Mumbai constituting 35 per cent of the sector’s transacted volumes, followed by NCR and Pune. E-commerce, while no longer the dominant sector, made a strong comeback with 3.3 million sq ft – a 61 per cent increase over the previous year, now accounting for 10 per cent of all activity.
Transaction volumes grew across all cities except Kolkata, with Mumbai leading with 7.5 million sq ft – up 63 per cent y-o-y. Pune and Chennai registered 76 per cent and 135 per cent growth respectively, led by strong manufacturing uptake. Ahmedabad and Bengaluru also recorded notable expansions.
The Ahmedabad market reached a new half-yearly high of 3.6 million sq ft, driven by manufacturing firms taking up 48 per cent of the area transacted. Similarly, Bengaluru also saw a 72 per cent y-o-y surge, with 65 per cent of leasing volume, led by manufacturing sector occupiers – the highest share for the city since H1 2023.
While the office market has almost reached the one billion sq ft mark in H1 2025, the warehousing and industrial market crossed 513 million sq ft, with 26.9 million sq ft becoming operational across the top eight markets. However, this trailed demand during the period, helped lower the pan-India vacancy to 12.1 per cent, from 13.1 per cent in H1 2024, says the report.
Grade A properties constituted 75 per cent of the new supply, reflecting developer response to occupier preference for high-specifications, ESG-aligned spaces. Grade A vacancy (12.9 per cent) remained higher than Grade B (10.7 per cent), due to speculative development in anticipation of demand.
All primary markets recorded a 3-5 per cent y-o-y rise in rental values, led by Mumbai (at 4.7 per cent), Kolkata (4.6 per cent) and Pune (3.8 per cent). Healthy occupier traction and the rising demand for efficient, automated logistics parks, with sustainability features, has kept rent growth buoyant across markets.
With India’s macro-economic resilience, strong PMI (purchasing managers’ index) and improving global positioning, demand from the industrial and warehousing market is expected to sustain. The growth seen in H1 2025 signals a well-diversified and broad-based occupier demand, reducing reliance on any one sector. As businesses prioritise supply chain efficiency and cost control, Grade A, ESG-compliant assets should continue to dominate future demand.