India’s warehousing and logistics sector recorded 10.6 million sq ft of absorption across the top seven cities in Q2 2026, registering a 7% quarter-on-quarter decline, according to Vestian Research.
Despite the sequential moderation, the sector continued to demonstrate resilience during the first half of 2026. Total absorption reached 22.0 million sq ft in H1 2026, the highest first-half leasing volume recorded in the past year. H1 absorption was 16% higher year-on-year and 11% above H2 2025.
Mumbai drives Western India’s warehousing demand
Western India remained the key growth engine during Q2 2026, with Mumbai and Pune together accounting for 65% of pan-India warehousing absorption, compared with 33% a year earlier.
Mumbai led the country with 5.04 million sq ft of absorption, recording 6% quarterly growth and a sharp 459% increase over Q2 2025. The city has maintained an upward trajectory over the past four quarters, with the Bhiwandi micro-market playing a major role.
Nearly 69% of Mumbai’s Q2 absorption came from Bhiwandi, underlining the micro-market’s growing importance to the city’s warehousing and logistics ecosystem.
Pune ranked second with 1.78 million sq ft of absorption. However, leasing activity declined 60% from Q1 2026, when several large transactions had been concluded. Despite the quarterly decline, Pune’s Q2 absorption was 90% higher than the year-earlier period.
NCR, Bengaluru and Chennai also see healthy demand
The National Capital Region (NCR) recorded 1.24 million sq ft of absorption in Q2 2026, registering 70% growth over the previous quarter and 75% year-on-year growth.
Bengaluru also witnessed a significant recovery. Absorption reached 0.97 million sq ft, up sharply from 0.17 million sq ft in Q1 2026, although it remained 52% below Q2 2025.
Chennai recorded 0.69 million sq ft of leasing, increasing 17% sequentially and 52% annually. Hyderabad, meanwhile, registered 0.46 million sq ft, down 34% from the previous quarter but broadly stable compared with Q2 2025.
Kolkata saw a strong rebound, with absorption rising to 0.38 million sq ft from just 0.01 million sq ft in Q1. This represented a 212% year-on-year increase.
3PL companies lead warehousing demand
Third-party logistics (3PL) companies remained the biggest source of occupier demand during Q2 2026, accounting for 41% of total absorption.
Consumer Goods & Services followed with a 12% share, while Engineering & Manufacturing accounted for 11%. Together, these three segments contributed 64% of overall leasing activity.
Energy, Automobiles & Auto Components, and Chemicals & Petrochemicals collectively accounted for another 22% of absorption.
The data indicates that demand continues to be driven primarily by industries with significant supply-chain and distribution requirements.
Institutional investment remains selective
Despite sustained occupier demand, institutional investors remained cautious amid global uncertainty.
Institutional investment in the sector stood at US$27 million in Q2 2026, accounting for only 1% of total quarterly real estate investment. Investment volumes were 25% higher than in Q1 2026 but remained below the level recorded in Q2 2025.
Vestian expects continued government spending on infrastructure to support the warehousing and logistics sector. Higher capital expenditure under the Union Budget 2026–27, along with investments in multimodal connectivity, freight corridors, logistics parks and cold-chain infrastructure, is expected to improve supply-chain efficiency and support the expansion of modern warehousing facilities.
Green warehouses emerge as a key differentiator
The sector is also witnessing a shift in occupier priorities, with sustainability becoming increasingly important in warehouse selection.
Shrinivas Rao, FRICS, CEO, Vestian, said the warehousing industry is undergoing a structural transformation, moving beyond traditional considerations such as supply-chain optimisation, operational efficiency and proximity to demand centres.
According to Rao, occupiers are increasingly looking for Grade-A green warehouses that align with their ESG commitments and longer-term business objectives.
With government support, infrastructure development and supply-chain modernisation continuing, the sector is expected to see sustained demand from 3PL, Engineering & Manufacturing, and Consumer Goods & Services companies.
Technology-enabled warehousing and multimodal infrastructure are also expected to support future leasing activity and gradually improve institutional investor confidence.
City-wise Warehousing Absorption — Q2 2026
| City | Q2 2026 | Q1 2026 | Q2 2025 | Q2 2026 QoQ | Q2 2026 YoY |
|---|---|---|---|---|---|
| Mumbai | 5.04 Mn sq ft | 4.76 Mn sq ft | 0.90 Mn sq ft | +6% | +459% |
| Pune | 1.78 Mn sq ft | 4.46 Mn sq ft | 0.94 Mn sq ft | -60% | +90% |
| NCR | 1.24 Mn sq ft | 0.73 Mn sq ft | 0.71 Mn sq ft | +70% | +75% |
| Bengaluru | 0.97 Mn sq ft | 0.17 Mn sq ft | 2.03 Mn sq ft | +476% | -52% |
| Chennai | 0.69 Mn sq ft | 0.59 Mn sq ft | 0.45 Mn sq ft | +17% | +52% |
| Hyderabad | 0.46 Mn sq ft | 0.69 Mn sq ft | 0.45 Mn sq ft | -34% | +2% |
| Kolkata | 0.38 Mn sq ft | 0.01 Mn sq ft | 0.12 Mn sq ft | +5,081% | +212% |
| Pan-India | 10.56 Mn sq ft | 11.41 Mn sq ft | 5.60 Mn sq ft | -7% | +89% |
Also Read: Indian Logistics & Warehousing: 6 Key Trends to Watch in 2025
