India’s warehousing absorption hits 18.9 mn sq ft in H1 2025; Rentals stable: Vestian

India’s warehousing sector absorbed 18.9 mn sq ft in H1 2025, with Pune topping rentals at ₹31/sq ft on strong 3PL, auto, engineering, and manufacturing demand

India’s warehousing sector recorded an absorption of 18.9 million sq ft across the top seven cities in the first half of 2025, even as average rentals remained stable between ₹18– ₹31 per sq ft per month, according to a report by real estate consultancy Vestian.

Pune led the market with the highest rental value at ₹31 per sq ft per month, driven by strong demand from the 3PL, automotive, engineering, and manufacturing sectors. The city saw a 34% increase in rentals on a half-yearly basis and a 13% jump year-on-year, particularly in high-demand submarkets like Khed and Chakan. Limited land availability and rising land costs also contributed to the surge in transaction values.

India’s warehousing sector saw 18.9 million sq ft absorption across seven major cities in H1 2025, with average rents steady at ₹18– ₹31 per sq ft, Vestian said. (Photo for representational purposes only) (Pixabay)

In contrast, Mumbai reported the lowest average rentals at ₹18 per sq ft per month. While rentals in the city rose 2% compared to H2 2024, they were down 2% from the same period last year. The relative stability was attributed to balanced demand and steady new supply.

In Hyderabad, rentals held steady at ₹19 per sq ft per month, with a modest 1% annual increase. Bengaluru, despite a significant rise in demand, saw rents fall by 5% year-on-year to ₹19 per sq ft/month. Chennai recorded average rentals of ₹25 per sq ft/month, marking a 3% rise over the previous half and a 2% annual gain.

The National Capital Region (NCR) saw a sharp drop, with rentals falling 10% year-on-year and 4% half-yearly to ₹21 per sq ft/month, driven largely by nearly 60% of leasing activity happening below average rent levels. In Kolkata, rentals stood at ₹21 per sq ft/month, showing a slight 1% decline from the previous half but an 8% annual increase, despite limited absorption activity.

Investments see steep decline

The report said that despite healthy demand and rental stability, the warehousing segment saw a significant decline in investments.

Total investments fell to $32 million in H1 2025, a steep 98% drop compared to the same period last year. Its share in overall real estate investments plummeted from 42% in H1 2024 to just 1%, indicating a shift in investor sentiment, the report said.

Vestian attributed this to a move towards asset-light strategies, rising operational costs, and cautious investor behaviour amid global economic uncertainties.

Long-term outlook

Shrinivas Rao, FRICS, CEO of Vestian, said that while H1 2025 witnessed a temporary dip in investments, the sector’s long-term outlook remains strong. “Strong demand across key markets, the expansion of multimodal logistics infrastructure, and the growing focus on sustainable, tech-enabled warehousing solutions signal long-term growth,” he said.

He said that government initiatives under the Gati Shakti plan and increasing traction in tier-2 and tier-3 cities are expected to drive the next phase of growth in India’s warehousing sector.