Bengaluru industrial net absorption doubles in H1 2025

Net absorption reached 6.3 million sq ft during the period.

According to a JLL report, in H1 2025, net absorption in Bengaluru's overall Grade A and Grade B warehousing & light manufacturing market rose to 6.3 million sq ft, double that of H1 2024. 

“With 87% of this demand in Grade A spaces, there is increasing occupier preference for such quality, compliant projects. Among the submarkets, Hoskote had the most, followed by Hosur Road,” the report said.

Here’s more from JLL:

Major demand drivers include engineering, e-commerce and auto & ancillaries, which accounted for more than 60% of the total demand during H1 2025. Additionally, 3PL/logistics, home & construction and retail sectors also made significant contributions to demand.

Grade A supply holds a 86% share of quarterly additions

In H1 2025, the warehousing market recorded 5.9 million sq ft of space additions, with 86% having Grade A specs, amid increasing traction from institutional developers and investors.

The vacancy rates reduced by 130 bps y-o-y to reach 9.6%. Notably, the vacancy in prime Grade A spaces was considerably low at 2.0% in H1 2025.

Rents rise 4.4% y-o-y, with increasing demand and land prices

Rents rose by 4.4% over the previous year on the back of increased demand, increased traction from institutional developers/investors and an increase in land rates.

This upward trend in rents is expected to continue in the foreseeable future, primarily propelled by heightened investments from institutional investors and developers such as IndoSpace, Ascendas, Welspun, etc.

Outlook: Market to remain on track for significant growth

Bengaluru’s warehousing sector is set for significant growth in 2025, with the total stock expected to reach 70 million sq ft. This expansion will be driven by new Grade A developments, supported by key institutional investors infusing new supply.

Demand to be fuelled by various proposed infrastructure projects, including BMIC and CBIC, which will greatly improve connectivity between Bengaluru and other regions. With the increasing demand, the vacancy rates will likely hover below 8% over the next four years.