India’s Warehousing Sector Hits Record H1 Leasing of 22 Million Sq Ft Despite Minor Q2 Slowdown, Vestian Report Shows
New Delhi, July 29, 2026: India’s warehousing and logistics sector recorded 10.6 million square feet of absorption across top seven cities in the second quarter of 2026, marking a minor 7% quarter-on-quarter decline. Despite this slight dip in leasing activity, overall demand remained strong in the first half of the year, reaching a total absorption of 22.0 million square feet. This represents the highest first-half leasing volume recorded in the past year, growing 16% year-on-year and 11% compared to the second half of 2025, demonstrating the market’s ongoing resilience against global economic headwinds, workplace solutions firm Vestian said in its India Warehousing & Logistics Sector Review for Q2 2026.
Western India spearheaded regional growth during the quarter, with Mumbai and Pune jointly capturing 65% of total pan-India absorption, up significantly from 33% during the same period last year. Mumbai stood out as the primary market driver, registering 5.0 million square feet in leasing volume—a 6% quarterly and 459% annual surge—largely spurred by robust activity in the Bhiwandi micro-market, which comprised nearly 69% of the city’s total volume. Pune followed as the second-largest market at 1.8 million square feet, despite experiencing a 60% sequential drop following an exceptionally strong first quarter.
Other major urban centers showed notable momentum, with the National Capital Region recording 1.2 million square feet of absorption, reflecting a 70% quarter-on-quarter and 75% year-on-year increase. Bengaluru experienced a sharp rebound to nearly 1.0 million square feet, while Chennai posted sequential and annual gains to reach 0.7 million square feet. Kolkata rebounded from negligible leasing in the prior quarter to record 0.4 million square feet, while Hyderabad absorbed 0.5 million square feet, down 34% sequentially but remaining steady on an annual basis.
Core industry sectors continued to generate the vast majority of space requirements during the second quarter. Third-party logistics providers led demand by securing a 41% market share, followed by Consumer Goods & Services at 12% and Engineering & Manufacturing at 11%. Combined, these three segments accounted for nearly two-thirds of total absorption, with Energy, Automobile & Auto Components, and Chemicals & Petrochemicals collectively contributing an additional 22%.
While occupier demand remained steady, institutional investors took a cautious stance amid broader global uncertainty. Total investments in the sector reached USD 27 million in the second quarter, marking a 25% increase over the previous quarter but continuing to lag behind year-ago levels, representing just 1% of total quarterly real estate funding. Government infrastructure investments under the Union Budget 2026–27—targeting freight corridors, multimodal connectivity, cold-chain capacity, and logistics parks—are expected to further enhance operational efficiency and maintain long-term investor confidence.
Shrinivas Rao, FRICS, CEO, Vestian, said, “India’s warehousing sector is undergoing a structural transformation, evolving beyond traditional priorities such as supply chain optimization, operational efficiency, and proximity to demand centres. Sustainability has emerged as a key differentiator, with occupiers increasingly seeking Grade-A green warehouses that align with their ESG commitments and long-term business objectives. Backed by supportive government policies and sustained infrastructure development, this transition is expected to accelerate further, reinforcing the sector’s appeal to both global occupiers and long-term institutional investors.”
Looking ahead, market drivers are expected to be led by third-party logistics, manufacturing, and consumer goods companies. Ongoing modernization, green warehousing initiatives, and continued investment in multimodal infrastructure are projected to sustain occupier demand and incrementally boost institutional capital deployment in the coming quarters.
