Absorption recorded at 2.01 mn sq ft in Q1 2025; 3PL leads demand for Grade A spaces

• Q1 2025 saw record warehousing demand, with net absorption reaching 2.01 mn sq ft. Delhi-NH8 dominated among the submarkets, followed by Sonipat-Hassangarh and Ghaziabad-Noida.
• The 3PL sector led demand in Q1 2025, with auto & ancillaries and retail following. Occupiers strongly favored high-quality, compliant spaces, driving prime Grade A warehouses to attract maximum demand.

New supply of 1.45 mn sq ft pushes vacancy to 21.1%; yet Grade A space availability remains tight

• Q1 2025 saw significant warehousing market growth, with 1.45 mn sq ft of space added in the quarter. Delhi-NH8 led in new supply, followed by Ghaziabad-Noida and Sonipat-Hassangarh.
• Vacancy rates hit 21.1% in Q1 2025 as new supply outpaced demand. Grade B space saw increased speculative supply, pushing its vacancy to 28.5%. However, Grade A vacancy dropped to 10.5% due to high demand, highlighting preference for quality spaces in the market.

Rental surge continues: 5.5% y-o-y rise as institutional investors bet big on Grade A warehousing demand

• Grade A warehousing demand and institutional interest fueled a 5.5% year-over-year rental surge in Q1 with rising land costs further contributing to this trend. This reflects the sector’s growing appeal and the increasing value placed on high-quality industrial space.
• Rents expected to continue their upward trend, driven by major institutional investments. Key players such as Indospace, Horizon Industrial Parks, Ascendas, Welspun, etc. are fueling this growth with commitments to the warehouse sector.

Outlook: Delhi NCR’s warehouse surge and infrastructure to support stock projections of 109 mn sq ft

• NCR warehousing stock is expected to hit 109 mn sq ft by 2025, led by Grade A projects from large investors. Delhi-NH8 submarket is likely to lead in supply and demand, highlighting this cluster’s strategic importance.
• Infrastructure projects such as DMIC, WDFC, and EDFC will boost warehousing demand while enhancing Delhi’s connectivity. 3PL, Retail and FMCG sectors’ growth may keep vacancy rates under 15% over the next 4 years, signaling strong market fundamentals.