Whalesbook
India's Industrial and Logistics Sector Hits Historic High
India's industrial and logistics sector has achieved a historic milestone, with leasing volumes soaring to an all-time high of 76.5 million square feet across 24 major cities this year. This represents a significant increase of nearly 19 percent compared to the previous year, underscoring the sector's robust post-pandemic growth trajectory.
The surge is primarily fueled by strong demand from key economic drivers. Data from real estate consultant Savills India reveals that the manufacturing sector accounted for the largest share of leased spaces at 29 percent. Third-party logistics firms followed closely, taking up 28 percent, while e-commerce players utilized 12 percent of the newly leased areas.
The Core Issue
The exceptional absorption figure of 76.5 million sq ft this year surpasses the 64.5 million sq ft recorded in the 2024 calendar year. This consistent upward trend highlights the sector's resilience and its pivotal role in supporting India's expanding economy.
Financial Implications
This record demand translates into significant economic activity and investment potential. Increased leasing activity drives revenue for developers and logistics providers, potentially leading to higher rental yields and greater interest from institutional investors. The growth also signifies expanding operational footprints for manufacturing, e-commerce, and logistics companies.
Tier-I Cities Lead Growth
The eight major tier-1 cities—Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, Delhi-NCR, and Pune—collectively witnessed a substantial 20 percent growth in leasing. These cities saw absorption rise to 59.5 million square feet this year, up from 49.7 million square feet in 2024.
Delhi-NCR emerged as the top performer within the tier-1 category, recording leasing of 13 million square feet, a notable increase from 9.8 million square feet in 2024. This concentration of activity in prime urban centers reflects their importance as logistical hubs.
Tier-II and Tier-III Cities Expand
Demonstrating a more widespread trend, leasing activities in tier-II and tier-III cities also experienced robust growth. These smaller urban centers collectively saw a 14.5 percent increase, reaching 17 million square feet in the 2025 calendar year, compared to 14.8 million square feet in the preceding year. The 16 tier-II and tier-III cities include Guwahati, Bhubaneshwar, Patna, Hosur, Coimbatore, Rajpura, Lucknow, Jaipur, Nagpur, Surat, Indore, Kochi, Hubli, Vizag, Belgaum, and Anantapur.
Future Outlook
Looking ahead, Savills India maintains an optimistic outlook for the sector. The firm anticipates that both the supply and absorption of industrial and logistics spaces are poised to exceed 80 million sq ft in the upcoming year, indicating sustained momentum.
Impact
The record-breaking demand for industrial and logistics spaces signifies a booming sector critical to India's economic infrastructure. This growth is expected to positively influence related industries, including manufacturing, e-commerce, and transportation, potentially leading to job creation and increased investment in warehousing and distribution networks. This trend is a strong indicator of underlying economic health and expansion. Impact Rating: 8/10
Difficult Terms Explained
- Industrial and logistics spaces: Buildings used for manufacturing, storage, and distribution of goods, like factories and warehouses.
- Leasing volumes: The total amount of space rented or leased by companies.
- Absorption: The amount of newly available commercial space that is leased by end-users.
- Tier-I cities: Major metropolitan cities in India, such as Delhi, Mumbai, Bengaluru.
- Tier-II and Tier-III cities: Smaller cities and towns in India that are growing in economic importance.
- Third-party logistics (3PL): Companies that provide outsourced logistics services, such as warehousing, transportation, and distribution.
- E-commerce players: Businesses that conduct commercial transactions primarily over the internet.