Bengaluru industrial vacancy rates to hover below 8% in the next four years

Thanks to increasing warehouse demand.

Bengaluru’s warehousing sector is set for significant growth in 2025 says a JLL report, with the total stock expected to reach 66.5 mn sq ft. This expansion will be driven by new Grade A developments, supported by key institutional investors like Indospace, Ascendas, NDR, Blackstone.

“Demand is fueled by various proposed infrastructure projects, including Industrial and economic corridors such as BMIC and CBIC, which will greatly improve connectivity. With the increasing demand, the vacancy rates are likely to hover below 8% in the next 4 years,” the report adds.

Here’s more from JLL:

In 2024, the market saw net absorption reach 5.51 mn sq ft and the gross absorption at 7.26 mn sq ft. Among the submarkets, Hosur Road – Hosur City had the largest share, followed by Tumkur Road and Hoskote.

Major demand drivers were 3PL/ Logistics and Retail players, accounting for ~50% of the annual demand, followed by E-Commerce, FMCD and Auto & Ancillary sectors. Grade A contributed more than 60% of the demand showing occupiers’ preference for good quality spaces.

70% of new supply in Grade A space with increasing traction from Institutional investors

In 2024, the warehouse market experienced addition of 5.59 mn sq ft of space, with ~70% being Grade A space amid increasing traction from institutional developers and investors.

The vacancy rate reduced by 100 bps y-o-y to reach 11.1%. Notably, the vacancy of prime grade A spaces is considerably low at 3.7% in 2024.

Increase in demand of prime Grade A spaces have resulted in 5.7% y-o-y rental appreciation

The rents have risen by 5.7% on a y-o-y basis on the back of increased demand, increased traction from institutional developers/ investors and an increase in land rates.

The 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, LOGOS, Ascendas, Welspun, NDR, etc.