India Warehousing Leasing Declines 7% QoQ to 10.6 Mn Sq Ft in Q2 2026; H1 Records Highest First-Half Absorption: Vestian

Mumbai and Pune accounted for 65% of pan-India absorption as H1 2026 leasing reached 22.0 Mn sq ft despite global headwinds.

India's warehousing and logistics sector recorded 10.6 million sq ft of leasing absorption during Q2 2026, reflecting a 7% quarter-on-quarter decline, according to Vestian. Despite the sequential moderation, the sector achieved 22.0 million sq ft of absorption in H1 2026, marking the highest first-half leasing volume recorded in the past year.

India's warehousing and logistics market maintained steady occupier demand during the first half of 2026 despite a quarter-on-quarter slowdown in leasing activity. According to Vestian, the top seven cities collectively registered 10.6 million sq ft of absorption in Q2 2026, taking total H1 2026 absorption to 22.0 million sq ft.

The first-half performance represented a 16% year-on-year increase and an 11% rise compared to H2 2025, indicating continued resilience amid ongoing global headwinds.

Western India continued to drive leasing activity in Q2 2026. Mumbai and Pune together accounted for 65% of the country's total absorption, compared with 33% during the corresponding period last year. Mumbai emerged as the leading market, supported by strong leasing in the Bhiwandi micro-market, which contributed nearly 69% of the city's total absorption.

Pune remained the second-largest warehousing market during the quarter. However, its share moderated to 17% from 39% in Q1 2026 following the completion of several large leasing transactions during the previous quarter. NCR, Bengaluru, Chennai and Kolkata also recorded healthy occupier demand, reflecting continued activity across major logistics markets.

Third-party logistics (3PL) companies remained the largest occupier segment, accounting for 41% of leasing activity during Q2 2026. Consumer Goods & Services followed with a 12% share, while Engineering & Manufacturing contributed 11%. Together, these three sectors represented nearly 64% of total absorption. Energy, Automobiles & Auto Components, and Chemicals & Petrochemicals together contributed an additional 22%.

Investor interest in the warehousing sector remained supported by long-term demand fundamentals. However, institutional investment activity continued to be selective amid global uncertainty. Investments totalled USD 27 Mn during Q2 2026, representing 1% of overall quarterly real estate investments. Although investment volumes increased by 25% over the previous quarter, they remained below the level recorded during the same period last year.

City-wise Warehousing Absorption (Mn Sq Ft)

Source: Vestian Research

Mumbai led all cities with 5.0 million sq ft of leasing absorption, posting 6% quarter-on-quarter growth and 459% year-on-year growth. The city continued its upward trend over the past four quarters, driven by sustained leasing activity in the Bhiwandi micro-market. Pune followed with 1.8 million sq ft, although absorption declined by 60% compared to Q1 2026 after several large transactions concluded during the previous quarter.

NCR recorded 1.2 million sq ft of absorption, increasing by 70% sequentially and 75% annually. Bengaluru also registered a strong recovery, with leasing reaching 1.0 million sq ft, its highest quarterly level since Q2 2025.

Chennai maintained positive momentum with 0.7 million sq ft of absorption, rising 17% quarter-on-quarter and 52% year-on-year. Hyderabad recorded 0.5 million sq ft, representing a 34% sequential decline while remaining broadly stable compared to Q2 2025. Kolkata rebounded during the quarter, with absorption increasing to 0.4 million sq ft from a negligible level in Q1 2026 and registering annual growth of 212%.

The report noted that the sector is expected to benefit from the government's continued emphasis on infrastructure-led growth under the Union Budget 2026–27. Higher capital expenditure, along with investments in multimodal connectivity, freight corridors, logistics parks and cold-chain infrastructure, is anticipated to improve supply chain efficiency and support the expansion of modern warehousing facilities.

Shrinivas Rao, FRICS, CEO, Vestian, said, “India's warehousing sector is undergoing a structural transformation, evolving beyond traditional priorities such as supply chain optimization, 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. Backed by supportive government policies and sustained infrastructure development, this transition is expected to accelerate further, reinforcing the sector's appeal to both global occupiers and long-term institutional investors.”

Looking ahead, demand from 3PL, Engineering & Manufacturing, and Consumer Goods & Services is expected to remain the primary driver of leasing activity. Continued investment in multimodal infrastructure, technology-enabled warehousing and supply chain modernization is also expected to support occupier demand while strengthening institutional investor confidence over time.