What is the story about?
What's Happening?
Bengaluru's industrial real estate market has experienced a significant surge in net absorption, reaching 6.3 million square feet in the first half of 2025, according to a report by JLL. This figure represents a doubling from the same period in 2024. The demand is predominantly for Grade A spaces, which account for 87% of the total absorption. Key sectors driving this demand include engineering, e-commerce, and auto & ancillaries, which together make up over 60% of the total demand. The report highlights that the submarkets of Hoskote and Hosur Road are leading in terms of demand. Additionally, the market saw 5.9 million square feet of new space added, with 86% being Grade A specifications. Vacancy rates have decreased by 130 basis points year-over-year to 9.6%, with prime Grade A spaces having a notably low vacancy rate of 2.0%.
Why It's Important?
The doubling of net absorption in Bengaluru's industrial market underscores a robust demand for high-quality warehousing and manufacturing spaces. This trend is significant for the real estate sector as it indicates a shift towards more compliant and quality projects, driven by institutional investors and developers. The rise in demand and subsequent increase in rents, which have grown by 4.4% year-over-year, reflect the market's attractiveness to investors. This growth is poised to continue, supported by infrastructure projects that will enhance connectivity and further stimulate demand. The implications for the U.S. real estate market include potential investment opportunities and partnerships, as U.S. investors may look to capitalize on the burgeoning Indian market.
What's Next?
The outlook for Bengaluru's warehousing sector remains positive, with expectations of significant growth throughout 2025. The total stock is projected to reach 70 million square feet, driven by new Grade A developments and investments from key institutional players. Proposed infrastructure projects, such as the Bangalore-Mysore Infrastructure Corridor (BMIC) and the Chennai-Bangalore Industrial Corridor (CBIC), are anticipated to improve regional connectivity, further boosting demand. Vacancy rates are expected to remain below 8% over the next four years, indicating a sustained interest in the market.
AI Generated Content
Do you find this article useful?
