Hyderabad Holds Steady as Industrial Leasing Grows Nationwide
Engineering and e-commerce firms drove 46% of Q1 2025 leasing. Hyderabad remained steady as NCR and Chennai saw record activity.
image for illustrative purpose
The industrial and warehousing segment in India recorded a solid performance in the first quarter of 2025, with Hyderabad setting the tone through steady demand and sustained developer activity. According to the report by Colliers, the city saw 0.3 million sq ft of leasing in Grade A spaces, matching the volume from the previous quarter and reflecting a 50 per cent year-on-year growth, despite a broader slowdown in new supply locally.
Across the top eight Indian cities, the total leasing in Q1 2025 touched 9 million sq ft, registering a 15 per cent rise over the same period last year. Delhi NCR and Chennai led the overall leasing activity, together contributing 57 per cent of the total uptake. Delhi NCR alone accounted for 3.1 million sq ft, while Chennai stood at 2.0 million sq ft.
In terms of sectoral contributions, engineering and e-commerce firms drove nearly half the leasing volume. Engineering firms leased around 2.2 million sq ft, particularly active in Chennai and Bengaluru, while e-commerce companies followed with close to 2 million sq ft, led by demand in Delhi NCR and Mumbai. Notably, both sectors outperformed the traditionally dominant Third Party Logistics (3PL) segment this quarter.
City-level leasing momentum was driven by specific micro-markets. In Delhi NCR, Luhari witnessed 0.9 million sq ft of leasing, while Bhiwandi in Mumbai led the way nationally with 1.0 million sq ft. Chennai's NH-16 corridor followed with 0.7 million sq ft. These micro-markets accounted for a significant share of their respective cities' leasing.
New supply across top cities stood at 9.4 million sq ft in Q1 2025, marking a 16 per cent increase from the previous year. Delhi NCR and Chennai accounted for nearly 50 per cent of the new supply, highlighting the strong construction pipeline in these cities. However, Hyderabad recorded only 0.2 million sq ft of new additions, down 67 per cent YoY.
Vacancy rates rose by 250 basis points, reaching approximately 13 per cent by the end of Q1 2025 due to tenant exits and market churn. Rental values increased in most cities amid high demand in key industrial zones. Large deals exceeding 200,000 sq ft accounted for 48 per cent of total leasing in Q1, amounting to 4.3 million sq ft. Delhi NCR led with 1.9 million sq ft of large transactions, followed by Chennai with 1.0 million sq ft. These transactions were mainly driven by e-commerce and engineering firms.
Automotive occupiers also saw considerable leasing activity, picking up 1.3 million sq ft of space. The broad demand across sectors is reflective of positive economic indicators and continued investor interest in the industrial and logistics space.
According to Colliers, the leasing momentum in 2025 is likely to persist, with established markets such as Delhi NCR, Chennai, and emerging centers like Hyderabad contributing significantly. The alignment of supply with leasing patterns points to increased developer confidence and a promising outlook for the remainder of the year.
Grade A Leasing and Supply Trends (in million sq ft):
Leasing - Q1 2025:
- Delhi NCR: 3.1
- Chennai: 2.0
- Mumbai: 1.0
- Bengaluru: 0.8
- Pune: 0.7
- Kolkata: 0.5
- Hyderabad: 0.3
- Ahmedabad: 0.6
Supply - Q1 2025:
- Delhi NCR: 2.5
- Chennai: 2.0
- Mumbai: 1.9
- Bengaluru: 0.9
- Pune: 0.9
- Hyderabad: 0.2
- Kolkata: 0.5
- Ahmedabad: 0.5
