India’s industrial and warehousing sector achieved a historic milestone in the first half of 2025 (H1 2025) as leasing activity soared 63% year-on-year, touching an unprecedented 27.1 million square feet across eight major urban centers. This sharp uptick, as reported by real estate consultancy CBRE, underscores the surging interest in India's modern logistics infrastructure, with significant contributions from third-party logistics (3PL) providers and e-commerce players, reshaping the demand landscape.

According to the CBRE data, the 3PL segment led leasing activity, capturing 32% of the total leased space, while e-commerce firms accounted for 25%, collectively responsible for 57% of all warehousing demand in the first half of 2025. This growth is attributed to increased consumer expectations, the need for faster deliveries, and supply chain optimisation strategies adopted by leading logistics and retail companies in India.

Delhi-NCR Tops Leasing Charts

Among India's major cities, Delhi-NCR dominated the warehousing demand chart with 7.3 million sq. ft. leased, indicating its growing stature as the nation’s logistics and distribution hub. Bengaluru followed with 4 million sq. ft., supported by strong demand from technology and retail sectors, while Hyderabad (3.6 million sq. ft.) and Kolkata (3.3 million sq. ft.) also registered substantial leasing activity. The report highlights that Mumbai, Chennai, Pune, and Ahmedabad sustained healthy demand levels as well, marking robust pan-India warehousing growth.

New Supply Keeps Pace With Demand

On the supply side, 16.7 million square feet of new warehousing space was added during H1 2025. Bengaluru, Chennai, and Mumbai collectively contributed 57% of the new stock, reflecting the continued confidence among developers and investors in these core logistics markets. Despite the large influx of new space, the demand-supply equilibrium remained stable, driven by quality-focused occupier preferences.

Shift Toward Premium, Sustainable Facilities

CBRE’s outlook suggests that the leasing momentum is expected to remain strong throughout H2 2025, with 3PL, e-commerce, and retail players continuing to be the primary drivers of space absorption. The report also underlines a growing shift towards premium-grade, sustainable, and technology-enabled warehouses as companies aim to streamline their operations, reduce carbon footprints, and enhance operational efficiencies.

This trend is particularly visible among global brands setting up regional distribution centers (RDCs) and national distribution centers (NDCs) to serve the rapidly growing Indian consumer base. Automation, smart inventory tracking systems, and green building certifications are becoming critical components of new warehousing projects, signalling a maturing logistics ecosystem.

Tier-II Cities: The Next Frontier

A notable highlight from the CBRE study is the emergence of tier-II cities as viable warehousing hubs. Locations such as Lucknow, Coimbatore, Indore, and Bhubaneswar are witnessing heightened developer interest and initial leasing traction, largely driven by regional consumption growth, cost-effective land availability, and infrastructure enhancements under government-backed logistics and industrial corridor programs.

The National Logistics Policy (NLP) and the PM Gati Shakti Master Plan have further supported logistics network integration, which is helping to expand the warehousing footprint into non-metro regions. These cities are expected to gain further momentum in the next 12–24 months.

Market Drivers: E-commerce, 3PL, Retail, and More

E-commerce companies continue to transform the warehousing market by necessitating last-mile hubs and multi-tiered logistics nodes to serve urban and rural populations alike. Simultaneously, 3PL firms are consolidating their presence through built-to-suit (BTS) facilities, aiming to provide value-added services like packaging, inventory management, and express delivery.

The retail sector, particularly fashion and electronics, is also expanding warehousing requirements with the adoption of omnichannel strategies. Cold storage and pharmaceutical warehousing are witnessing increased investments, especially post-pandemic, as companies prioritize resilient and agile storage solutions.

Challenges Remain, but Outlook Positive

Despite the growth, the sector is not without its challenges. Land acquisition hurdles, regulatory delays, and fragmented infrastructure in some regions continue to pose constraints. Additionally, the demand for skilled manpower and automation technologies poses an operational challenge for mid-sized players.

Nonetheless, with institutional capital, REITs, and logistics park developers increasingly showing interest in the Indian warehousing segment, the long-term outlook remains positive.

CBRE’s H1 2025 report not only reflects record-breaking demand figures but also highlights a structural transformation underway in the logistics real estate market. As companies continue to refine their supply chain footprints, India's warehousing sector is poised to become a critical enabler of economic growth, backed by technology, sustainability, and wider geographical distribution.

Conclusion

The record leasing activity of 27.1 million sq. ft. in H1 2025 marks a defining moment for India’s industrial and warehousing real estate sector. With 3PL and e-commerce driving more than half of this demand and tier-II cities showing increasing participation, the sector is on a strong upward trajectory. Going forward, the focus on tech-driven, sustainable, and customer-centric facilities will continue to shape the future of India’s warehousing infrastructure. The momentum witnessed in H1 2025 is likely to be sustained, if not surpassed, in the coming quarters.

The Upcoming IPOs in this week and coming weeks are BLT Logistics, Bhadora Industries, Highway Infrastructure, Flysbs Aviation, Parth Electricals & Engineering, Jyoti Global Plast, Cash Ur Drive Marketing, Renol Polychem, Jyoti Global Plast, Jyoti Global Plast.

The Current active IPO are B.D. Industries (Pune), NSDL, Takyon Networks, Mehul Colours, M&B Engineering, Sri Lotus Developers & Realty, Aditya Infotech, Lakshmi India Finance, Kaytex Fabrics, Umiya Mobile, Repono.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.