Manufacturing Leads India’s Warehousing Growth in Q3 2025 as overall absorption record 16% YoY growth: Knight Frank

• Manufacturing leads activity with 44% share of the total transactions in Q3 2025
• Grade A constitute 56% of total space absorbed in Q3 2025
• E-commerce transactions spike 137% YoY in Q3 2025

Knight Frank India, a leading international property consultancy, in its latest edition of India Industrial and Warehousing Market Report Q3 2025, recorded a 16% year-on-year (YoY) increase in warehousing demand to 17.1 mn sq ft in the quarter. With sustained occupier appetite, year-to-date (YTD) leasing activity reached 49.2 mn sq ft, up 32% YoY, placing the sector on track for another record year.

The report highlights continued momentum from manufacturing, 3PL, and e-commerce occupiers, supported by resilient domestic demand, supply chain diversification, and policy-led industrial expansion. Grade A facilities remained the preferred choice among occupiers, accounting for 61% of leased space so far in 2025, compared to 58% in the same period last year.

Manufacturing occupiers (excluding FMCG and FMCD) maintained their lead as the largest demand driver, contributing 44% of total transactions in Q3 2025 and 45% YTD. The sector clocked a 56% YoY increase in volumes in the first nine months of 2025.

3PL operators continued to support strong leasing volumes, absorbing 27% of space YTD and posting a 17% YoY rise in transactions between January and September 2025.

The e-commerce sector recorded a sharp revival, leasing 2.5 mn sq ft in Q3 2025, a 137% YoY surge, marking its highest quarterly volume since early 2023. E-commerce accounted for 12% of activity YTD, highlighting renewed traction in the segment.

Industry-Split of Transaction Volume in mn sq ft

Source: Knight Frank Research

Notes:

• Other Manufacturing – These include all manufacturing sectors (automobile, electronics, pharmaceuticals, etc.) except FMCG and FMCD.
• Miscellaneous – These include services such as telecom, real estate, document management, agricultural warehousing and publishing.

Chennai, Mumbai, NCR, Pune, and Ahmedabad have all recorded their highest YTD Q3 transaction volumes in three years. Notably, Chennai has already surpassed its previous full-year peak and is on track for an exceptional 2025 performance. The manufacturing sector was the primary driver behind the 62% YoY growth seen in Chennai’s transaction volumes in YTD Q3 2025 and incidentally, this sector’s occupiers also accounted for a massive 62% of the area transacted in this market during the period.

Market-Split of Transaction Volumes

Source: Knight Frank Research

Transaction activity increased across major cities, with Mumbai and NCR emerging as standout performers in YTD as well as quarterly terms. Mumbai registered a 123% YoY increase in Q3 2025 and 10 mn sq ft YTD, accounting for 20% of national volumes so far in 2025. Delhi NCR surged 93% YoY in Q3 2025 and 50% YoY to 8.8 mn sq ft in the January-September 2025 period, supported largely by manufacturing and 3PL demand. Chennai, Pune, and Bengaluru also posted strong YTD gains, aided by manufacturing-led occupier traction. Five markets, including Chennai, Mumbai, NCR, Pune and Ahmedabad are at three-year record highs in YTD terms, while YTD volumes this year in Chennai have surpassed annual highs seen previously in that market.

The total warehousing and industrial stock across the top eight markets^[1] stood at 530 mn sq ft as of Q3 2025. During this quarter, 17.5 mn sq ft of new supply became operational. Grade A developments accounted for 84% of new supply in Q3, and 78% YTD, reflecting growing compliance, automation, and sustainability aspirations among occupiers.

Vacancy remained stood at 12.2% with speculative supply increasing significantly. Vacancy in Grade A assets was higher at 13%, compared to 9.2% for Grade B, primarily reflecting the large share of speculative supply introduced to meet the growing demand for premium Grade A facilities.

Market-Split of Stock and Vacancy in Q3 2025

Source: Knight Frank Research

Rent growth remained positive across markets, supported by strong occupier activity, particularly from the manufacturing sector. Average rents rose by 3-4% YoY across cities in Q3 2025, as both development and absorption of Grade A spaces continued to gain momentum.

Average Rent (In INR/sq ft/month)

Source: Knight Frank Research

Shishir Baijal, Chairman and Managing Director, Knight Frank India, said, “India’s industrial and warehousing landscape continues to strengthen on the back of fundamental shifts, particularly manufacturing expansion, supply chain diversification, and improving logistics efficiency. Demand remains broad-based, with leasing activity sustaining growth momentum and Grade A facilities now accounting for 61% in YTD terms of occupier take-up, reflecting a clear move toward global-standard infrastructure. With strong business sentiment and sustained policy support, the sector remains positioned for long-term, high-quality growth.”

Outlook

The manufacturing outlook remains strong as firms continue diversifying supply chains and shifting production to India, supported by consistent government incentives. Growing 3PL participation in logistics optimization and the renewed strength of e-commerce are also set to play a pivotal role in driving the next phase of market expansion.

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