Summary
Industrial leasing in India’s top eight cities experienced a striking surge in recent years, led predominantly by the Delhi-NCR region, which accounted for the largest share of the market. Between January and September 2025, leasing volumes jumped by 28% year-on-year to a record 37 million square feet, driven by robust demand from e-commerce, quick-commerce, third-party logistics (3PL), and manufacturing sectors. This growth reflects India’s expanding industrial and logistics (I&L) ecosystem, supported by rising manufacturing capacity and the strategic expansion of supply chains across major urban centers.
Delhi-NCR’s prominence as the industrial leasing powerhouse is underpinned by its superior connectivity, extensive infrastructure, and proximity to key transport hubs such as Indira Gandhi International Airport and major highways. The region’s industrial estates—including Bawana, Okhla, and Manesar—serve diverse sectors ranging from automotive and electronics to FMCG and food processing. Accelerated urbanization, fueled by infrastructure projects like the Delhi Metro and Dwarka Expressway, has further catalyzed the development of industrial hubs and satellite cities, making Delhi-NCR the focal point of India’s industrial real estate boom.
The surge in leasing activity is marked by a high volume of smaller transactions under 50,000 square feet, reflecting a dynamic, fragmented market dominated by domestic corporations, which held 82% of leasing shares in Q3 2024, up from 67% the previous year. Rental growth has been particularly notable in key industrial nodes such as Mumbai’s Bhiwandi and Ahmedabad’s Bavla and Sanand, although none match the leasing volumes or urban expansion seen in Delhi-NCR. The influx of institutional capital and the focus on Grade A, technologically advanced industrial spaces underscore the sector’s maturation and attractiveness to investors and occupiers alike.
Despite this rapid growth, challenges remain, including the need to redevelop and upgrade aging industrial clusters, improve infrastructure, and manage environmental concerns related to urban sprawl. Government initiatives targeting industrial policy reforms, infrastructure upgrades, and sustainable urban development aim to address these issues while capitalizing on the opportunities presented by India’s evolving industrial landscape. The sustained demand from e-commerce, 3PL, and manufacturing sectors positions India’s industrial leasing market for continued expansion in the near future.
Background
India’s industrial and logistics leasing sector has witnessed significant growth in recent years, driven by increasing demand across multiple urban centers. In 2024, leasing activity reached a record peak of 39.5 million square feet, supported by a robust supply of 38.6 million square feet, with Delhi-NCR, Bengaluru, and Kolkata collectively accounting for nearly 60% of the total leasing volume. This surge reflects the expanding manufacturing base and higher capacity utilization, which contributed to leasing volumes of 16 million square feet in 2023 and continued growth thereafter.
The rise in leasing activity has been propelled largely by e-commerce companies, quick-commerce operators, and the expansion plans of third-party logistics (3PL) and fast-moving consumer goods (FMCG) companies. The second half of 2024 alone saw a 17% year-on-year increase, with approximately 23 million square feet leased during this period. Furthermore, engineering firms have demonstrated strong leasing activity, particularly in Chennai and Bengaluru, while e-commerce operators led leasing volumes in Delhi-NCR and Mumbai, marking sustained sector growth.
Underlying this industrial expansion is the broader urban development facilitated by infrastructure improvements such as the Delhi Metro. The transformation of vegetation and open land into built-up areas around metro line buffer zones underscores urban expansion driven by enhanced connectivity. Metro line extensions have heightened demand for residential, commercial, and industrial properties, making locations near metro stations prime for development. This infrastructure-led urban growth has played a critical role in enabling the industrial leasing surge observed in India’s top cities.
Recent Trends in Industrial Leasing Across India’s Top Cities
Leasing of industrial and warehousing spaces in India’s top eight cities witnessed significant growth in recent years, reflecting the expanding industrial and logistics (I&L) sector driven by multiple demand factors. Between January and September 2025, leasing surged by 28 per cent to a record 37 million square feet, compared to 28.8 million square feet during the same period in 2024. This sharp increase was primarily led by robust demand in the Delhi-NCR region, which accounted for the largest share of leasing activity at 11.7 million square feet, followed by Bengaluru with 5.7 million square feet and Hyderabad at 4.6 million square feet.
Earlier, the I&L sector had shown steady growth with leasing rising 8 per cent in 2022 to 31.6 million square feet from 29.4 million square feet in 2021, attributed largely to companies’ intent to strengthen supply chains. Growth continued into 2023, with the sector reaching a five-year high in absorption, recording a 13 per cent year-over-year rise in leasing from January to September 2023, totaling 27.3 million square feet. The 3PL (third-party logistics) players dominated leasing, accounting for 45 per cent of the activity, supported by a 57 per cent year-over-year increase in supply addition.
In Q1 2025, industrial and warehousing leasing continued to grow by 15 per cent year-on-year, with the engineering and e-commerce sectors driving demand, especially in Delhi NCR and Chennai. Large developers, often backed by institutional funds, have played a significant role in scaling up supply to meet this rising demand, with expectations for supply additions to reach between 35 and 37 million square feet by the end of 2023.
Detailed Analysis of Industrial Leasing Surge in the Top 8 Indian Cities
The industrial leasing sector across India’s eight major cities experienced a remarkable surge, with a 28% increase in leased space during January to September 2025, reaching a record 37 million square feet. This growth was largely propelled by robust demand in the Delhi-NCR region, which emerged as the leading market in industrial and warehousing space leasing.
Leasing Trends and City-wise Performance
From July to September 2024 alone, leasing activity in the Industrial & Logistics (I&L) sector witnessed a significant 48% quarter-on-quarter rise, escalating from 7.7 million sq ft in Q2 to 11.4 million sq ft in Q3. The cities of Delhi-NCR, Kolkata, and Hyderabad were the frontrunners, accounting collectively for 65% of the total leasing volume during this period. Delhi-NCR led the pack with 3.4 million sq ft of leased space, followed by Kolkata with 2.4 million sq ft and Hyderabad with 1.7 million sq ft. Other notable contributors included Bengaluru (1.5 million sq ft), Mumbai (0.9 million sq ft), and Chennai (0.7 million sq ft).
A notable feature of the leasing surge was the dominance of smaller transactions under 50,000 sq ft, which comprised 43% of total leased volumes, reflecting the dynamic and fragmented nature of the sector. Third-party logistics providers were the primary demand generators, responsible for 41% of leasing activity, followed by engineering and manufacturing firms at 18%.
Domestic corporations intensified their footprint, capturing 82% of leasing shares in Q3 2024, up from 67% the previous year. APAC companies held 9%, while EMEA firms accounted for 6%. Rental growth was particularly pronounced in key industrial nodes such as Mumbai’s Bhiwandi (NH-3) with an 11% increase, Ahmedabad’s Bavla and Sanand regions showing 10% and 8% rises respectively, and Ghaziabad in Delhi-NCR witnessing a 7% growth.
Delhi-NCR: The Industrial Leasing Powerhouse
Delhi-NCR’s leadership in industrial leasing is underpinned by its strategic advantages including excellent connectivity via major highways like NH8, proximity to Indira Gandhi International Airport, well-developed infrastructure, and a skilled labor pool. The region’s industrial estates such as Bawana, Okhla, Naraina, Mayapuri, Narela, Udyog Vihar, Noida, Faridabad, Sahibabad, and Manesar form a robust ecosystem supporting diverse manufacturing sectors including automotive, electronics, FMCG, and food processing.
The region also benefits from strong government initiatives aimed at boosting MSMEs and startups, along with a focus on emerging industries such as electric vehicles (EVs), green mobility, and semiconductors, which promise to sustain leasing demand. Delhi’s recognition as an “Achiever” in the Logistics Ease Assessment further cements its status as a logistics and industrial hub.
Infrastructure and Future Outlook
Infrastructure development plays a pivotal role in facilitating the leasing boom. Major projects like the Dwarka Expressway (NH 248-BB) enhance connectivity between Delhi and Gurgaon, easing freight movement and benefiting industrial activity. Additionally, the introduction of India’s first rapid rail system near Delhi, with operating speeds up to 160 km/h, is expected to further boost regional logistics capabilities.
Looking ahead, the demand for warehousing and industrial space in India’s top cities, particularly Delhi-NCR, is anticipated to remain strong. The continued expansion of 3PL providers, quick-commerce concepts, and e-commerce firms will likely sustain leasing growth in 2025 and beyond.
Comparative Growth Analysis Among the Top Cities
The industrial and logistics (I&L) sector in India witnessed a remarkable surge in leasing activity across the country’s top eight cities during 2024, with Delhi-NCR emerging as the leader in growth and demand. From July to September 2024 alone, leasing activity in these cities reached 11.4 million square feet, marking a significant 48% increase compared to 7.7 million square feet in the previous quarter. This growth was driven primarily by robust demand from domestic corporations, which accounted for 82% of the leasing share, a notable rise from 67% in Q3 2023. Companies from the Asia-Pacific (APAC) region and the Europe, Middle East, and Africa (EMEA) regions followed, contributing 9% and 6% of leasing activity respectively.
Delhi-NCR stood out with an impressive 28% projected increase in built-up urban areas from 3,386.76 sq km in 2023 to 3,868.28 sq km by 2033, representing an additional 481.5 sq km of urbanization. This rapid urban expansion has catalyzed the growth of industrial hubs and satellite cities such as Gurugram, Noida, and Faridabad, which have become critical intersections for industrial and logistics networks. The expansion of metro connectivity and infrastructure in the region further accelerated these developments, despite environmental challenges like urban sprawl and reduced green spaces around metro buffer zones.
Leasing activity in Delhi-NCR was particularly buoyant, with the first quarter of 2025 alone accounting for half of the total leasing volume recorded in 2024. This surge was fueled by a strong demand for Grade A industrial and warehousing spaces, primarily from engineering and e-commerce sectors. The region also witnessed a 7% rental growth in key micro-markets such as Ghaziabad, driven by its strategic location and proximity to major highways (NH-24, NH-58, NH-91).
Comparatively, other major industrial markets such as Mumbai’s Bhiwandi (NH-3) experienced an 11% increase in rental rates, Ahmedabad’s Bavla and Sanand recorded 10% and 8% growth respectively, while Chennai’s Western Corridor 2 and Pune’s Pimpri-Chinchwad saw rental hikes of 5% each. However, none matched the scale of leasing volume or urban expansion seen in Delhi-NCR, underscoring the region’s dominance in driving India’s industrial leasing boom.
Impact of Industrial Leasing Surge
The surge in industrial leasing activity across India’s top eight cities, particularly driven by Delhi-NCR, has had a significant impact on the region’s economic and industrial landscape. In the second half of 2024, leasing activity grew by 17 per cent year-on-year, with approximately 23 million square feet leased, largely propelled by the recovery in demand from e-commerce companies, quick-commerce operators, and expansion plans by third-party logistics (3PL) and fast-moving consumer goods (FMCG) companies.
A key contributor to this growth has been the strong demand from domestic occupiers, who accounted for about 54% of total leasing activity. Notably, the flex sector, along with BFSI and manufacturing, played a crucial role, with flex spaces alone constituting over one-third of Delhi NCR’s leasing volume. This shift indicates a diversification in the industrial real estate market, catering to more flexible and adaptive workspace requirements.
The rise in leasing activity has also been closely linked to improvements in regional infrastructure, which not only supports economic development but also enhances the quality of life by facilitating easier daily commutes and logistics operations. Delhi NCR’s well-developed industrial infrastructure, combined with affordable land costs and proximity to major markets such as Delhi and Gurgaon, has made it an attractive hub for startups and small businesses, further reinforcing the industrial ecosystem.
Moreover, the increase in demand and absorption of industrial and logistics space aligns with broader government initiatives aimed at boosting India’s manufacturing ecosystem and consumer markets, benefiting sectors like FMCG, retail, and e-commerce. Despite regulatory challenges such as the Real Estate Regulatory Authority (RERA) curtailing new project launches, demand has remained robust, maintaining stable home values in most parts of Delhi NCR except for marginal growth in Gurgaon.
The overall impact of this leasing surge is reflected in the projected absorption of 36–38 million square feet of industrial real estate space by the end of 2023 across the top eight cities, marking a five-year high. This growth has been driven largely by institutional fund-backed developers and 3PL players, who dominated leasing activity with a 45% share. The increased supply and demand dynamics highlight a maturing industrial real estate market that is embracing sustainability, technological integration, and skill development to meet evolving industrial needs.
Challenges and Opportunities in Expanding Industrial Leasing
The expansion of industrial leasing in India’s top cities, particularly Delhi-NCR, has presented both significant challenges and promising opportunities. One of the primary challenges lies in the redevelopment and upgrading of existing industrial areas. Many industrial clusters in Delhi-NCR are non-conforming and require restructuring to improve land use efficiency, consolidate land parcels, and enhance infrastructure. The Delhi government has proposed measures such as drone surveys for land identification and phased redevelopment to address these issues, aiming to create more floor space and better industrial environments. Additionally, industrialists have voiced the need for improved infrastructure within these areas, prompting government-led projects to enhance facilities managed by municipal corporations and development authorities.
Connectivity remains a crucial factor influencing industrial leasing growth. The region benefits from proximity to major highways, airports, and railways, which supports efficient transportation and logistics operations, a key driver for e-commerce, 3PL, and FMCG companies expanding their footprint. The ongoing and upcoming infrastructure mega projects, such as the Delhi-Meerut rail corridor and the Delhi Mumbai Industrial Corridor, further bolster logistics capabilities and promise to streamline supply chains, thereby enhancing the attractiveness of leasing industrial space in the region.
On the opportunity front, the surge in demand from sectors like e-commerce, quick-commerce, and third-party logistics has catalyzed leasing activity, which saw a notable 17% year-on-year growth in the latter half of 2024, amounting to approximately 23 million square feet leased. Industry leaders emphasize that the participation of larger developers, supported by institutional funding contributing around 40% of completed projects, is a strong indicator of sectoral growth potential. Moreover, the emphasis on technologically advanced, strategically located, and investment-grade assets is expected to command premium rents, signaling lucrative opportunities for developers and investors alike.
Government initiatives and industrial policies have also fostered a conducive environment for industrial growth. The state’s commitment to providing a progressive business environment, including support for knowledge-based and hi-tech industries, coupled with consistent GSDP growth, underpins a positive outlook for industrial leasing expansion. The redevelopment plans not only address infrastructure deficits but also aim to
The content is provided by Harper Eastwood, 11 Minute Read
