New Delhi: Despite 7% quarter-on-quarter decline in leasing activity during Q2 2026, India’s warehousing and logistics sector maintained a healthy occupier demand in H1 2026. The top seven cities recorded 10.6 Mn sq ft of absorption in Q2, taking the H1 2026 total to 22.0 Mn sq ft—the highest first-half leasing volume in the past year. Consequently, H1 absorption increased by 16% year-on-year and 11% over H2 2025, underscoring the sector’s resilience despite persistent global headwinds.
Western India remained the key growth engine during Q2 2026, with Mumbai and Pune accounting for 65% of the pan-India absorption, up from 33% a year earlier. Mumbai emerged as the largest contributor, driven by robust leasing activity in Bhiwandi, which accounted for nearly 69% of the city’s absorption. Although Pune remained the second-largest market, its share moderated to 17% from 39% in the previous quarter following strong leasing activity in Q1. Meanwhile, NCR, Bengaluru, Chennai, and Kolkata also registered healthy demand, reflecting broad-based occupier activity across major markets.
Occupier demand was mainly concentrated among core industry segments during Q2 2026. Third-party logistics (3PL) companies led leasing activity with 41% share, followed by Consumer Goods & Services (12%) and Engineering & Manufacturing (11%). Together, these sectors accounted for nearly two-thirds (64%) of the total absorption, while Energy, Automobiles & Auto Components, and Chemicals & Petrochemicals collectively contributed another 22%.
Robust demand continued to support long-term investor interest in the sector. However, amid global uncertainty, institutional investors remained selective, with investments totalling USD 27 Mn in Q2 2026, accounting for just 1% of the total quarterly real estate investments. While investment volumes increased by 25% over the previous quarter, they remained below the level recorded a year earlier.City-wise Absorption
| City | Q2 2026 | Q1 2026 | Q2 2025 | Q2 2026 vs Q1 2026 | Q2 2026 vs Q2 2025 |
| Bengaluru | 0.97 | 0.17 | 2.03 | 476% | -52% |
| Chennai | 0.69 | 0.59 | 0.45 | 17% | 52% |
| Hyderabad | 0.46 | 0.69 | 0.45 | -34% | 2% |
| Pune | 1.78 | 4.46 | 0.94 | -60% | 90% |
| Mumbai | 5.04 | 4.76 | 0.90 | 6% | 459% |
| Kolkata | 0.38 | 0.01 | 0.12 | 5,081% | 212% |
| NCR | 1.24 | 0.73 | 0.71 | 70% | 75% |
| Pan-India | 10.56 | 11.41 | 5.60 | -7% | 89% |
Source: Vestian Research
- Mumbai led with 5.0 Mn sq ft of absorption, registering 6% quarterly and 459% annual growth. The city has maintained a steady upward trajectory over the past four quarters, supported by sustained leasing activity in Bhiwandi micro-market. Pune ranked second with 1.8 Mn sq ft; however, absorption declined by 60% from the previous quarter after several large transactions concluded in Q1 2026.
- NCR recorded 1.2 Mn sq ft of absorption, increasing by 70% quarter-on-quarter and 75% year-on-year. Bengaluru also witnessed a strong recovery, with leasing rising to 1.0 Mn sq ft—the highest since Q2 2025—following a subdued previous quarter.
- Chennai continued its positive momentum, with absorption rising 17% sequentially and 52% annually to 0.7 Mn sq ft. Hyderabad, in contrast, recorded 0.5 Mn sq ft, declining 34% over the previous quarter while remaining broadly stable year-on-year.
- Kolkata rebounded strongly during the quarter, with absorption increasing to 0.4 Mn sq ft from a negligible level in Q1 2026 and registering 212% annual growth.
The sector is expected to benefit from the government’s continued emphasis on infrastructure-led growth, reinforced by the Union Budget 2026–27. Higher capital expenditure, alongside ongoing investments in multimodal connectivity, freight corridors, logistics parks, and cold-chain infrastructure, is anticipated to improve supply chain efficiency and support the expansion of modern warehousing facilities. These structural developments are expected to create new growth opportunities for both occupiers and investors.
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.”
Going forward, demand from 3PL, Engineering & Manufacturing, and Consumer Goods & Services is expected to remain the primary driver of leasing activity. Continued investments in multimodal infrastructure, technology-enabled warehousing, and supply chain modernization are likely to sustain occupier demand while gradually strengthening institutional investor confidence in the sector.
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