India’s logistics and industrial (L&I) real estate segment is approaching a historic inflection point. According to data released by Cushman & Wakefield, leasing volumes in 2025 are expected to touch nearly 60 million square feet, marking the highest annual absorption ever recorded for the sector.

This would also be the fourth consecutive year in which leasing activity crosses the 50 million square feet threshold, underscoring that the sector’s growth is no longer cyclical but structural. Market participants increasingly view current demand levels as a new baseline rather than a temporary peak.

Over the past decade, India’s logistics and industrial real estate market has evolved from a fragmented warehousing ecosystem into a more organised, institutionally backed asset class. Policy interventions such as GST implementation, production-linked incentive (PLI) schemes, and infrastructure investments have steadily improved supply-chain efficiency. Post-COVID, this transformation accelerated as companies prioritised resilient sourcing, inventory buffers, and faster distribution networks.

Against this backdrop, the sector has delivered consistent year-on-year growth since 2022. The continuation of strong absorption into 2025 suggests that occupier demand is being driven by long-term operational needs rather than short-term capacity expansion.

By the first half of 2025, leasing volumes had already crossed 30.7 million square feet across India’s top eight markets Delhi-NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Kolkata, Pune, and Ahmedabad. With deal momentum remaining strong in H2, full-year absorption is now expected to approach the 60 million square feet mark.

The composition of demand highlights the sector’s diversification. Engineering and manufacturing occupiers accounted for the largest share at 32 percent, reflecting India’s push to strengthen domestic manufacturing and attract global supply-chain realignment. Third-party logistics players followed at 24 percent, driven by outsourcing trends among manufacturers and retailers. E-commerce contributed 15 percent, while automobiles (8 percent), FMCG (7 percent), and retail (5 percent) rounded out demand.

This broad-based participation is significant. Unlike earlier cycles that were heavily skewed toward e-commerce, the current phase is supported by multiple end-user industries, reducing concentration risk.

Sustained leasing above 50 million square feet for four straight years changes how investors and developers view the sector. Industry experts now suggest that 2025 volumes are likely to become the reference point for 2026 rather than an outlier. This has direct implications for capital allocation, land acquisition, and development planning.

For occupiers, tighter availability in key micro-markets is already translating into moderate rental growth. Cushman and Wakefield projects pan-India rental growth in the 3–7 percent range in 2026. Pune is expected to lead with around 7 percent growth, driven by tight vacancies and continued interest from manufacturing and 3PL players. Most major markets including Mumbai, Hyderabad, Chennai, Kolkata, Bengaluru, and Delhi-NCR are projected to see 4–5 percent growth, while Ahmedabad may see a softer 3 percent increase.

Abhishek Bhutani, Managing Director, Logistics & Industrial at Cushman & Wakefield, described 2025 as a landmark year for the sector. He noted that unprecedented demand has translated into broad-based rental growth, reflecting the structural strength of India’s logistics and industrial real estate.

Bhutani highlighted that manufacturing-led occupier momentum remains robust, supported by policy impetus, supply-chain diversification, and sustained expansion by both domestic and global players. He also pointed to continued institutional investor confidence, with cities such as Mumbai, Pune, Bengaluru, and Chennai attracting a significant share of capital inflows.

These comments align with broader government priorities around manufacturing self-reliance, export competitiveness, and infrastructure-led growth, lending policy visibility to the sector’s medium-term outlook.

Looking ahead, the development pipeline for 2026 appears healthy but measured. Pune, Bengaluru, and Chennai are expected to see supply additions of 7.5 to 13.75 million square feet, largely led by institutional developers. Mumbai and Delhi-NCR could add around 20 million square feet and 5 million square feet respectively, supported by large-format logistics parks along major transit corridors.

Kolkata and Hyderabad have more modest pipelines of about 4 million square feet and 3 million square feet, while Ahmedabad is projected to add just 0.5 million square feet. This calibrated supply expansion suggests that while new stock will support occupier demand, it is unlikely to overwhelm absorption in the near term.

For Indian markets, the sustained strength in L&I real estate reinforces confidence in allied sectors such as construction, industrial parks, logistics services, and capital goods. It also strengthens the investment case for REITs and private equity platforms focused on industrial assets.

The sector’s performance signals that India’s manufacturing and distribution ecosystem is scaling in a more organised and capital-efficient manner an important indicator for policymakers tracking the effectiveness of industrial and trade reforms.