Warehousing demand cools in 2025 after record high, says Vestian

India’s warehousing and logistics sector witnessed a natural moderation in demand in 2025 after hitting a record high the previous year, as occupiers shifted focus from aggressive expansion to consolidation and network optimisation, according to a report by real estate consultancy Vestian.

Total warehousing absorption declined to 38.7 million sq ft in 2025, down from 44.9 million sq ft in 2024, marking a 14 per cent year-on-year drop. However, the report noted that absorption levels remain 84 per cent higher than 2020, underlining the sector’s strong structural fundamentals.

Vestian attributed the slowdown to a high base effect following four years of rapid capacity creation by e-commerce firms, manufacturers and third-party logistics (3PL) players in the post-Covid period. With significant capacity already added, occupiers paused large-scale expansions in 2025 and prioritised efficiency, Grade A assets and strategic locations.

“This slowdown reflects a normal adjustment after an intense growth cycle rather than a weakening of demand,” the report said, adding that long-term prospects remain robust.

Commenting on the trend, Srinivas Rao, FRICS, CEO of Vestian, said the sector eased in 2025 amid global uncertainty and cautious occupier sentiment, but demand from core segments remained resilient. He added that strengthening domestic consumption, improving macroeconomic stability and easing financing conditions are expected to support a rebound in 2026.

City-wise performance

Among the top seven markets, Mumbai recorded the highest absorption at 15.2 million sq ft, despite an 18 per cent annual decline. Its share of pan-India absorption fell marginally to 39 per cent, while average rentals rose sharply by 16 per cent to Rs21 per sq ft per month.

Pune remained the second-largest warehousing market with 6.4 million sq ft of absorption, though volumes halved from the previous year.