In the post-Covid period, occupiers—particularly e-commerce, manufacturing, and third-party logistics (3PL) players have rapidly scaled up capacity to strengthen supply chains, support rising consumption, and ensure faster delivery timelines. This momentum led to a phase of accelerated growth across the sector. By 2025, a significant portion of this capacity had already been created, prompting occupiers to pause large-scale expansion and shift focus towards consolidating and optimising existing networks.
Consequently, absorption declined to 38.7 Mn sq ft in 2025, from a peak of 44.9 Mn sq ft in 2024. While absorption in 2025 was 14% lower year-on-year, it remained 84% higher than 2020 levels, underscoring the sector’s structural growth.
This slowdown, therefore, reflects a natural adjustment after an intense growth cycle rather than any weakening of underlying demand, with the sector’s long-term fundamentals continuing to remain strong. Echoing the same sentiment, Shrinivas Rao, FRICS, CEO, Vestian said, “Following four years of strong growth, warehousing and logistics sector slowed down in 2025 due to a high base effect and cautious occupier sentiment amid global uncertainty. Although absorption eased from peak levels, demand from e-commerce, manufacturing, and 3PLs remained resilient. The year saw a shift towards consolidation, with occupiers focusing on network optimisation and Grade A assets in key markets. With domestic consumption strengthening and macroeconomic stability improving, the sector is well positioned for a rebound in the coming year.”
City-wise Analysis
| City | 2024 | 2025 | Y-o-Y Growth |
|---|---|---|---|
| Bengaluru | 2.7 | 3.5 | 30% |
| Chennai | 2.6 | 3.6 | 39% |
| Hyderabad | 3.2 | 2.2 | -31% |
| Pune | 13.0 | 6.4 | -51% |
| Mumbai | 18.6 | 15.2 | -18% |
| Kolkata | 0.8 | 2.2 | 175% |
| NCR | 4.0 | 5.5 | 38% |
| Total | 44.9 | 38.7 | -14% |
Mumbai recorded the highest absorption among the top seven cities at 15.2 Mn sq ft, despite an 18% year-on-year decline. The city’s share in pan-India absorption fell from 41% in 2024 to 39% in 2025. Notwithstanding the correction in leasing activity, average rentals increased sharply by 16%, reaching ₹21.0/sq ft/month.
This year as well, Pune remained the second-largest market with an absorption of 6.4 Mn sq ft. However, absorption declined by nearly half from 13.0 Mn sq ft in 2024, indicating normalisation after an exceptionally strong previous year. Despite lower leasing volumes, rentals rose significantly by 22% to â‚ą28.0/sq ft/month, making Pune the most expensive warehousing market in the country.
Absorption in NCR rebounded by 38% over the previous year to 5.5 Mn sq ft. Its share in pan-India absorption increased from 9% to 14%, accompanied by a 4% annual rental appreciation to â‚ą23.0/sq ft/month.
Hyderabad’s share in pan-India absorption declined marginally from 7% in 2024 to 6% in 2025. In absolute terms, absorption fell sharply by 31%. However, rentals continued to firm up, increasing by 10% to ₹20.8/sq ft/month, despite subdued leasing activity.
Kolkata recorded a distinct surge in leasing activity, with its pan-India absorption share tripling to 6% in 2025. This translated into a 175% increase in absorption on a year-on-year basis. The strong demand led to a moderate 6% rise in rentals, which currently stand at â‚ą22.0/sq ft/month.
Bengaluru reported 30% increase in absorption in 2025 compared to the previous year. Despite healthy leasing momentum, rentals remained largely range-bound. A similar trend was observed in Chennai, where absorption rose by 39%, while rental values remained stable.
Looking ahead, robust domestic consumption, improving macroeconomic stability, and easing of financing conditions are expected to support demand for warehousing and logistics assets in 2026. As per industry estimates, annual absorption is projected to reach 40–45 Mn sq ft, indicating renewed traction for the sector.
