India’s industrial and logistics real estate sector witnessed a strong start to 2025, with leasing activity rising by 18.5% year-over-year in the January–March quarter, according to a new report by Savills India. A total of 160 lakh (16 million) square feet was leased across 24 cities, up from 135 lakh square feet in the same period last year. The surge is attributed to rising demand from core sectors such as manufacturing, third-party logistics (3PL), and retail.

“Tier-I cities accounted for 79 per cent of the leasing activities,” the report noted, highlighting metro markets like Delhi-NCR, Mumbai, Bengaluru, and Pune as key contributors. Meanwhile, emerging Tier-II and Tier-III cities, including Coimbatore, Jaipur, Lucknow, and Guwahati, represented 21% of the leasing volume.

Manufacturing led the charge sector-wise, contributing to 30% of the total space absorption. It was followed by 3PL players at 26%, retail at 12%, e-commerce at 10%, and FMCG/FMCD sectors at 9%. This pattern signals robust demand from B2B and B2C supply chain operators looking to expand or streamline operations.

Savills also reported a 23% increase in new supply during the same quarter, with 159 lakh square feet of fresh space added to the market. Tier-I cities dominated again, accounting for 12.4 million square feet (78%), while Tier-II and Tier-III cities collectively added 3.6 million square feet (22%).

The data indicates a healthy pipeline and growing investor confidence in India’s logistics infrastructure, driven by policy support, rising consumption, and increased focus on supply chain resilience.

As businesses shift toward omnichannel operations and just-in-time inventory models, experts expect sustained momentum in the industrial and logistics space throughout the year.