Following a phase of moderation in 2025, India’s warehousing and logistics sector has entered 2026 on a stronger footing, supported by improved occupier sentiment, resilient domestic demand, and continued infrastructure upgrades. After a year marked by cautious expansion strategies and network optimisation, occupiers are now gradually returning to expansion, pursuing selective capacity additions across key logistics corridors, particularly in high-demand Grade-A assets.
The top seven cities in India recorded an absorption of 11.4 Mn sq ft in Q1 2026, registering 8% quarter-on-quarter increase and the fourth consecutive quarter of sequential growth. While absorption declined by 14% year-on-year, leasing activity remained robust, led by 3PL, engineering & manufacturing, and consumer goods occupiers. Mumbai and Pune together contributed 81% of the total leasing activity, underscoring the continued dominance of established western industrial and logistics hubs in driving demand. The sustained quarterly recovery indicates that the moderation witnessed in 2025 was a phase of strategic recalibration rather than a structural slowdown in demand.
Echoing this sentiment, Shrinivas Rao, FRICS, CEO, Vestian said, “The warehousing and logistics sector has begun 2026 with renewed momentum, as occupiers resume expansion plans following a period of consolidation in 2025. Sequential growth in absorption reflects strong underlying market fundamentals, supported by rising manufacturing activity, infrastructure development, and resilient domestic consumption. While annual comparisons remain impacted by last year’s high base, the sector remains well positioned for sustained growth in the coming quarters.”
City-wise Analysis
- Mumbai recorded the highest absorption at 4.76 Mn sq ft in Q1 2026, accounting for 42% of the pan-India absorption.
- Pune emerged as the second-largest contributor with 4.46 Mn sq ft of absorption—surging by 162% quarter-on-quarter and 42% year-on-year, indicating a strong revival after subdued activity in the past quarters.
- Hyderabad recorded an absorption of 0.69 Mn sq ft in Q1 2026, witnessing 17% decline over the previous quarter but a notable 50% increase compared to the same period last year.
- NCR witnessed an absorption of 0.73 Mn sq ft, declining sharply by 61% sequentially and 57% year-on-year, reflecting muted leasing activity during the quarter.
- Chennai registered 0.59 Mn sq ft of absorption, down 50% over the previous quarter and 34% annually, following strong momentum in earlier quarters.
- Bengaluru, despite recording a sharp 566% quarterly increase, saw absorption decline by 87% annually, reaching 0.17 Mn sq ft in Q1 2026.
- Kolkata witnessed a steep fall in leasing activity, with absorption dropping to a negligible 0.01 Mn sq ft.
| City | Q1 2025 | Q1 2026 | Y-o-Y Growth |
| Bengaluru | 1.27 | 0.17 | -87% |
| Chennai | 0.89 | 0.59 | -34% |
| Hyderabad | 0.46 | 0.69 | 50% |
| Pune | 3.14 | 4.46 | 42% |
| Mumbai | 5.56 | 4.76 | -14% |
| Kolkata | 0.22 | 0.01 | -95% |
| NCR | 1.71 | 0.73 | -57% |
| Total | 13.3 | 11.41 | -14% |
Source: Vestian Research
Looking ahead, a growing emphasis on supply chain resilience, rising demand for modern Grade-A facilities, and continued expansion into emerging Tier-I and Tier-II logistics hubs are expected to drive the next phase of growth in 2026. Occupiers are likely to prioritise network efficiency, faster delivery capabilities, and technology-enabled warehousing solutions, creating fresh demand across strategic corridors. The warehousing and logistics sector is anticipated to witness annual absorption exceeding 45 Mn sq ft by the end of 2026, reflecting sustained demand in the sector.
