India’s warehousing and logistics sector recorded 10.6 million sq ft of leasing activity during Q2 2026, marking a 7% quarter-on-quarter decline, according to Vestian. Despite the sequential slowdown, overall demand remained resilient, with H1 2026 absorption reaching 22.0 million sq ft, the strongest first-half performance in the past year. Leasing activity rose 16% year-on-year and 11% compared to H2 2025, highlighting sustained occupier confidence despite ongoing global economic uncertainties.
Western India continued to dominate the market, with Mumbai and Pune accounting for 65% of total leasing activity during the quarter, compared to 33% in the same period last year. Mumbai emerged as the country’s leading warehousing market, driven largely by robust demand in the Bhiwandi micro-market, which contributed nearly 69% of the city’s total absorption. Pune remained the second-largest market despite a moderation in activity following an exceptionally strong first quarter.
Other major cities also witnessed healthy leasing momentum. NCR, Bengaluru, Chennai and Kolkata all recorded positive occupier demand, reflecting widespread activity across India’s key logistics hubs.
Third-party logistics (3PL) companies remained the largest occupier segment, accounting for 41% of total leasing. Consumer Goods & Services followed with 12%, while Engineering & Manufacturing contributed 11%. Collectively, these three sectors represented nearly 64% of overall absorption. Energy, Automobiles & Auto Components, and Chemicals & Petrochemicals together added another 22% to total leasing activity.
While occupier demand remained strong, institutional investment activity continued to be cautious. Warehousing attracted USD 27 million in investments during Q2 2026, representing just 1% of total quarterly real estate investments. Although investment volumes increased 25% over the previous quarter, they remained below the levels recorded a year earlier as investors maintained a selective approach amid global market uncertainty.
Among individual cities, Mumbai led the country with 5.0 million sq ft of absorption, registering 6% quarterly growth and an impressive 459% annual increase. NCR recorded 1.2 million sq ft, growing 70% quarter-on-quarter and 75% year-on-year, while Bengaluru recovered strongly with 1.0 million sq ft, its highest quarterly leasing since Q2 2025. Chennai posted 0.7 million sq ft, recording both quarterly and annual growth, whereas Hyderabad saw leasing soften compared to the previous quarter. Kolkata also witnessed a sharp revival, with absorption increasing more than threefold compared to the previous year.
Looking ahead, the sector is expected to benefit from the government’s continued infrastructure push under the Union Budget 2026-27. Increased capital expenditure, coupled with investments in multimodal connectivity, freight corridors, logistics parks and cold-chain infrastructure, is anticipated to strengthen supply chain efficiency and support the expansion of modern warehousing across the country.
Commenting on the market, Shrinivas Rao, FRICS, CEO, Vestian, said, “India’s warehousing sector is undergoing a structural transformation, evolving beyond traditional priorities such as supply chain optimisation, 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. Supported by favourable government policies and continued infrastructure development, this transition is expected to further enhance the sector’s attractiveness for both global occupiers and long-term institutional investors.”
With sustained demand from 3PL, Engineering & Manufacturing, and Consumer Goods & Services, alongside continued investments in infrastructure and technology-driven warehousing, the sector is expected to maintain healthy leasing momentum while gradually strengthening investor confidence.
