India’s industrial and warehousing sector continues to grow at a strong pace, but with a new twist—supply is rising faster than demand, and that could impact the market in the coming months.
According to a latest report by Colliers, the top 8 cities in India recorded 11 million sq ft of leasing (demand) in Q1 2026, marking a 22% increase compared to last year. At the same time, new supply jumped 33% year-on-year to 12.5 million sq ft, showing that developers are adding space aggressively.
Who Is Driving This Demand? 3PL Companies Take the Lead
The biggest driver of this growth is Third-Party Logistics (3PL) companies—these are firms that manage storage and delivery for other businesses.
- 3PL companies accounted for about one-third of total demand
- They leased 3.5 million sq ft in Q1 2026
- Demand from 3PL players was 1.8 times higher than last year
This surge is mainly due to:
- Growing e-commerce deliveries
- Faster logistics needs
- Expansion of warehouse networks across India
Along with 3PL, e-commerce and automobile companies also played a big role, together contributing 32% of total leasing activity.
Delhi NCR & Chennai Lead the Market
Among cities, Delhi NCR and Chennai emerged as the biggest demand hubs, contributing nearly 50% of total leasing.
Key City Highlights:
- Delhi NCR: 28% share of total demand
- Chennai: 21% share
- Bengaluru & Hyderabad: Saw 2–3X growth compared to last year
At a micro level:
- Hoskote–Narsapura (Bengaluru): ~1.4 million sq ft leasing
- Bhiwandi (Mumbai region): ~1.1 million sq ft leasing
These locations are becoming major logistics hubs due to better connectivity and infrastructure.
Big Deals Dominate the Market
Large warehouse deals are becoming more common:
- Deals above 2 lakh sq ft made up 48% of total demand
- Total large deals: 5.3 million sq ft
Major companies involved include:
- Honda Motors (Automobile sector)
- Safexpress (3PL sector)
- Campa Cola (FMCG sector)
These companies are expanding their supply chains and distribution networks across India.
Supply Rising Faster Than Demand
While demand is strong, new supply is growing even faster, which is a key concern.
- Total new supply: 12.5 million sq ft (↑33% YoY)
- Major contributors: Delhi NCR and Bengaluru (50% of supply)
City-wise Supply Trends:
- Bengaluru: Huge jump of 238% QoQ
- Hyderabad: 450% YoY growth
- Delhi NCR: 32% YoY growth
This indicates that developers are highly optimistic about future demand.
Vacancy Levels Rising – Should We Be Worried?
Because supply is increasing faster than demand:
- Vacancy rate has risen to 16.7%
- This is an increase of about 3.6% (360 basis points)
In simple terms, more warehouse space is lying empty compared to last year.
However, rental prices are still stable, with only some high-demand areas seeing increases.
What’s the Risk Ahead?
Experts warn that global issues like supply chain disruptions and the West Asia crisis could slow down growth in the short term.
But the long-term outlook remains positive due to:
- Government push for manufacturing
- Growth in e-commerce
- Improving logistics infrastructure
What This Means for You (Simple Takeaway)
- Warehousing demand is growing fast 📦
- Logistics companies (3PL) are leading the market 🚚
- Big cities like NCR, Chennai, Bengaluru are dominating 📍
- But supply is rising even faster than demand ⚠️
- This could lead to more empty warehouses in the short term
Also Read: Robust Investments Bolster Warehousing & Logistics Sector in 2024
