Industrial And Warehousing Sector Records 34.8 Million Square Feet In H1 2026 As Demand Growth Moderates: Savills India
New Delhi, July 2, 2026: India’s Industrial and Logistics sector sustained its momentum in the first half of 2026, demonstrating resilience as market absorption reached 34.8 million square feet. Data released by international real estate advisory firm Savills India reveals a measured 2.4 percent year-on-year growth compared to the 34.0 million square feet recorded during the same period last year. Demand was primarily driven by manufacturing and third-party logistics occupiers, which together accounted for 53 percent of total absorption. Tier-I cities continued to dominate the market with a 78 percent share of total absorption, equivalent to 27.3 million square feet, while Tier-II and Tier-III markets contributed 22 percent, or 7.5 million square feet.
On the supply side, the market witnessed a substantial influx of fresh space, totaling 42.7 million square feet, which represents a 27.8 percent year-on-year increase from the 33.4 million square feet delivered in the first half of 2025. Tier-I cities accounted for the lion’s share of this new inventory, bringing in 36.7 million square feet, a 34.4 percent annual jump, while Tier-II and Tier-III cities contributed 6.0 million square feet. According to Savills India, the delivery of these projects across various cities occurred in tandem with growing occupier demand.
“India’s manufacturing ecosystem is rapidly evolving into a globally integrated ‘Made for India and the World’ platform. Supported by proactive trade agreements and rising investments, this shift is driving strong demand for industrial and logistics real estate. As supply chains diversify and manufacturing expands, growth will be led by scale and new industrial clusters, creating long-term opportunities and strengthening India’s position in global value chains,” said Srinivas N, Managing Director, Industrial and Logistics, Savills India.
A segment-wise breakdown of absorption shows that manufacturing led the occupier space at 30 percent, followed by third-party logistics at 23 percent. The sector also saw sustained traction from the fast-moving consumer goods and fast-moving consumer durables segments, which jumped to an 18 percent share from 11 percent last year, while e-commerce accounted for 10 percent and retail captured 4 percent. Geographically, Delhi-NCR led the national demand by contributing 20 percent to total absorption, followed closely by Pune at 17 percent and Mumbai at 16 percent. In terms of supply distribution, Delhi-NCR also topped the list at 20 percent, while Mumbai and Chennai each accounted for 17 percent.
The report highlights a significant environmental, social, and governance-led shift toward higher-quality spaces, driven by an increasing focus on compliance and evolving occupier requirements. Consequently, Grade-A asset absorption rose to 59 percent in the first half of 2026, up from 55 percent in the first half of 2025, while Grade-B absorption fell to 41 percent. Fresh supply for Grade-A assets stood at 55 percent for the period, compared to 45 percent for Grade-B space.
Looking ahead at the remainder of the year, Savills India projects stable, demand-led growth for the sector, supported by manufacturing expansion and robust domestic consumption. The report notes that e-commerce demand continues to rise in Tier-II and Tier-III cities due to improving last-mile connectivity. Additionally, the quick-commerce segment is witnessing strong demand for the rapid expansion of dark stores. While fresh supply currently outpaces demand, leading to higher vacancies in the near term, rising land and construction costs are expected to trigger mild upward movement in rental values for compliant, Grade-A assets, ensuring the sector remains a highly resilient asset class for investors.
