Industrial market surges with historic net absorption recorded in Q1 2025

• Q1 CY2025 set a record with net absorption hitting 2.93 mn sq ft, the highest quarterly figure to date. Hosur Road – Hosur City cluster led among the submarkets, with Hoskote following closely behind.
• Engineering and E-Commerce drove 60%+ of Q1 demand. 3PL, Home & Construction, Auto, and FMCG also contributed significantly. Occupiers’ preference for high-quality, compliant spaces saw demand for prime Grade A warehouses account for 90%+ of the total.

Overall vacancy drops to 10.1%; Grade A vacancy at mere 2.4% as demand surges for quality warehouses

• Q1 saw 2.59 mn sq ft of new warehouse space, with ~90% being Grade A quality. This growth reflects increasing interest from institutional developers and investors, highlighting a trend towards high-quality industrial real estate and strong market confidence.
• Overall vacancy dropped 100 bps year-over-year to 10.1%. Significantly, prime Grade A spaces show exceptionally low vacancy at just 2.4% in 2024, indicating strong demand for high-quality industrial real estate amid a tightening market for premium space.

Rents surge 4.0%: Institutional investors drive sustained growth as market values quality spaces

• Rents surged 4.0% year-over-year, driven by heightened demand, growing interest from institutional developers and investors and rising land rates. This upward trend reflects the market’s robustness and the increasing value placed on quality industrial spaces.
• Rent growth is set to persist, fueled by increased investments from institutional players such as Indospace, Ascendas, Welspun, and NDR. This is also supported by the increasing traction from occupiers for quality spaces.

Outlook: Stock to hit 67.8 mn sq ft, vacancy to be under 8% as infrastructure projects fuel demand

• Bengaluru’s warehousing sector poised for major growth in 2025, with stock projected to hit 67.8 mn sq ft. New Grade A developments backed by large, well-known players is likely to drive market expansion.
• Bengaluru’s warehousing demand is likely to get a boost from infrastructure such as BMIC and CBIC corridors which will enhance connectivity with West and East India. Growing demand will likely keep vacancy under 10% for the next four years, keeping the market buoyant.