India’s Warehousing Leasing Touches 22 Mn Sq Ft in H1 2026 Despite Q2 Dip

Vestian reports strongest first-half warehouse absorption in a year as Mumbai leads demand and 3PL firms dominate leasing activity

India’s warehousing and logistics sector continued to demonstrate resilience in the first half of 2026, with total warehouse leasing reaching 22.0 million sq. ft., despite a 7% quarter-on-quarter decline in absorption during the second quarter, according to the latest report by Vestian.

The country’s seven major cities recorded 10.56 million sq. ft. of warehousing absorption in Q2 2026, down from 11.41 million sq. ft. in the previous quarter. However, cumulative leasing during H1 2026 increased 16% year-on-year and 11% compared with H2 2025, making it the strongest first-half performance in the past year.

Western India Drives Growth

Western India remained the largest contributor to warehouse demand during the quarter, with Mumbai and Pune accounting for 65% of total pan-India absorption, compared with 33% during the same period last year.

Mumbai emerged as the country’s leading warehousing market, recording 5.04 million sq. ft. of leasing activity. Absorption increased 6% quarter-on-quarter and an impressive 459% year-on-year, largely driven by sustained demand in the Bhiwandi micro-market, which accounted for nearly 69% of the city’s total leasing.

Pune ranked second with 1.78 million sq. ft., although leasing declined 60% from the previous quarter following several large transactions completed during Q1 2026.

Other Major Cities Show Healthy Demand

Among other leading markets:

• NCR recorded 1.24 million sq. ft., up 70% quarter-on-quarter and 75% year-on-year.
• Bengaluru witnessed a strong recovery with 0.97 million sq. ft., rising sharply from the previous quarter.
• Chennai posted 0.69 million sq. ft., reflecting 17% sequential and 52% annual growth.
• Hyderabad recorded 0.46 million sq. ft., declining 34% from Q1 while remaining broadly stable year-on-year.
• Kolkata rebounded significantly to 0.38 million sq. ft., registering 212% annual growth after minimal activity in the previous quarter.

3PL Firms Continue to Lead Leasing

Third-party logistics (3PL) companies remained the largest occupiers of warehouse space during Q2 2026, accounting for 41% of total leasing activity.

Other major demand drivers included:

• Consumer Goods & Services: 12%
• Engineering & Manufacturing: 11%

Together, these three sectors contributed nearly 64% of total warehouse absorption.

Additional demand came from:

• Energy
• Automobiles & Auto Components
• Chemicals & Petrochemicals

which collectively accounted for another 22% of leasing activity.

Investment Activity Remains Selective

Institutional investment in warehousing and logistics assets totalled US$27 million during Q2 2026.

Although investments increased 25% over the previous quarter, they represented only 1% of total quarterly real estate investments and remained below levels recorded a year earlier, reflecting continued caution amid global economic uncertainty.

Infrastructure Push to Support Future Growth

Vestian expects the sector to benefit from the Government of India’s continued focus on infrastructure development under the Union Budget 2026–27.

Ongoing investments in:

• Multimodal connectivity
• Dedicated freight corridors
• Logistics parks
• Cold-chain infrastructure

are expected to improve supply chain efficiency while creating additional opportunities for warehouse developers, occupiers and investors.

Commenting on the report, Shrinivas Rao, FRICS, CEO, Vestian, said India’s warehousing sector is evolving beyond traditional supply chain optimization toward sustainability-focused development.

He noted that occupiers are increasingly seeking Grade-A green warehouses that align with their environmental, social and governance (ESG) commitments, while supportive government policies and continued infrastructure investments are expected to strengthen long-term demand.

Looking ahead, Vestian expects leasing activity to remain driven by 3PL operators, engineering and manufacturing companies, and consumer goods businesses, supported by continued investments in modern warehousing, supply chain technology and multimodal logistics infrastructure.