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

Also Read: Indian Logistics & Warehousing: 6 Key Trends to Watch in 2025

The post India’s Warehousing Absorption Falls 7% to 10.6 Mn Sq Ft in Q2 2026 appeared first on Square Feat India.

Mumbai Powers National Growth With 47% Share

Mumbai emerged as the largest contributor, accounting for nearly half (47%) of India’s total absorption in Q3 2025. The city recorded 4.29 million sq ft, marking a 377% QoQ and 10% YoY increase.

Much of the demand centered around micro-markets such as:

• Bhiwandi
• Panvel

These two locations alone accounted for 96% of Mumbai’s absorption, signaling renewed confidence from occupiers in India’s most active logistics hub.

City-Wise Absorption Snapshot (Key Pointers)

• Mumbai: 4.29 mn sq ft | +377% QoQ | +10% YoY
• Kolkata: 1.26 mn sq ft | +950% QoQ | +186% YoY (highest ever for the city)
• NCR: 1.28 mn sq ft | +83% QoQ | -40% YoY
• Chennai: 1.13 mn sq ft | +151% QoQ | +38% YoY (best performance in 7 quarters)
• Hyderabad: 0.47 mn sq ft | +7% QoQ | -14% YoY
• Pune: 0.64 mn sq ft | -31% QoQ | -87% YoY (continued decline for 4th quarter)
• Bengaluru: 0.13 mn sq ft | -94% QoQ | -90% YoY (lowest among top cities)

Kolkata Records Its Highest-Ever Quarterly Absorption

Kolkata surprised the market with an extraordinary 950% QoQ surge, touching 1.26 million sq ft — its best performance on record. The spike reflects pent-up demand and large-scale commitments by occupiers.

Southern Markets Show Mixed Trends

• Chennai posted a strong comeback with its highest absorption in nearly two years.
• Hyderabad remained steady but saw a slight YoY decline.
• Bengaluru recorded an unusually weak quarter, marking the lowest absorption among major markets.

Pune’s Four-Quarter Decline Continues

Once a consistent performer, Pune saw absorption slide for the fourth consecutive quarter, driven by weakening occupier interest and delayed expansions.

Sector Outlook: E-commerce and 3PLs Driving Revival

Shrinivas Rao, FRICS, CEO of Vestian, said renewed demand from E-commerce and 3PL (third-party logistics) players is driving the turnaround:

“Mumbai, Kolkata, and NCR are leading the revival. The resurgence in occupier demand, coupled with momentum in e-commerce and 3PL, shows the sector’s strengthening fundamentals. Network optimisation and Grade-A warehouse preferences will reshape the market in coming quarters.”

Also Read: Industrial and Warehousing real estate industry

The post Warehousing Absorption Rebounds 64% in Q3 2025; Mumbai Leads India’s Logistics Recovery appeared first on Square Feat India.

Pune Leads with Highest Rentals

Pune registered the highest rental values at INR 31/sq ft/month, fuelled by demand from 3PL, automotive, engineering, and manufacturing sectors. The city posted a 34% half-yearly and 13% annual rise, mainly driven by high-value transactions in Khed and Chakan. Limited land availability and rising land prices further pushed transaction values upward.

Mumbai Posts Lowest Rentals

Mumbai recorded the lowest rentals among the top seven cities at INR 18/sq ft/month. While there was a 2% increase compared to H2 2024, rates dipped by 2% annually. Fresh supply additions and balanced demand-supply dynamics kept rents steady.

Mixed Trends Across Other Cities

• Hyderabad: INR 19/sq ft/month, 2% half-yearly rise, 1% annual increase.
• Bengaluru: INR 19/sq ft/month, no change half-yearly, 5% annual decline despite higher demand.
• Chennai: INR 25/sq ft/month, 3% half-yearly and 2% annual growth.
• NCR: INR 21/sq ft/month, down 4% half-yearly and 10% annually, with ~60% leasing below average rent.
• Kolkata: INR 21/sq ft/month, 1% half-yearly dip but 8% annual rise despite muted absorption.

City-wise Rental Snapshot

Source: Vestian Research

Investment Sees Steep Decline

Despite strong absorption and steady rentals, institutional investments plunged to USD 32 million in H1 2025 – a 98% drop from H1 2024 levels. Its share in total real estate investments collapsed from 42% a year ago to just 1%.
Vestian attributes this to a strategic industry shift towards asset-light models, cautious investor sentiment amid global uncertainty, and rising operational costs.

Source: Vestian Research

Outlook: Long-Term Growth Drivers in Place

Shrinivas Rao, FRICS, CEO, Vestian, noted that despite the investment dip, demand remains strong in key markets. The expansion of multimodal logistics infrastructure, focus on sustainable and tech-enabled solutions, and strategic projects under the Gati Shakti plan will drive the next growth phase. Rising interest in tier-2 and tier-3 cities is also expected to add momentum.

Also Read: Robust Investments Bolster Warehousing & Logistics Sector in 2024

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