Indian Logistics & Warehousing Outlook H2 2026: Sustained Growth & Supply Dynamics

► Market Momentum

India's industrial and logistics real estate sector maintained strong expansion momentum in the first half of 2026, supported by robust domestic consumption, expanding manufacturing capacity, and continuous supply chain upgrades.

Assessments from leading real estate consultancies highlight this upward trajectory, though they capture complementary tracking windows of market activity.

According to Cushman & Wakefield (C&W), gross leasing volume across the top eight cities reached a historic high of 36.2 MSF, representing an 18% year-on-year surge in signed corporate transactions and a 2% increase compared to the second half of 2025. 

At the same time, Savills reports total market absorption of 34.8 MSF across Tier-I, Tier-II, and Tier-III hubs, reflecting a 2.4% year-on-year increase. 

When comparing equivalent geographies, Savills recorded 27.3 MSF of park absorption in Tier-I cities (a 4.2% YoY increase), whereas C&W recorded 36.2 MSF in gross volume across equivalent core markets. 

Beyond the primary hubs, Savills noted that Tier-II and Tier-III cities accounted for 7.5 MSF, or 22%, of total absorption, alongside 6.0 MSF, or 14%, of new supply. 

The overarching variance between the two consultancies is an apples-to-apples vs. apples-to-oranges comparison rooted in differing asset-class perimeters and tracking definitions.

While C&W measures gross leasing commitments, legally binding lease executions, forward built-to-suit (BTS) deals, and standalone manufacturing plants across all locations, Savills strictly tracks gross lease transactions and space take-up (excluding renewals and tenant churn) within completed Grade-A and Grade-B institutional logistics parks.

► Asset Classes and Supply Dynamics

To fully understand these headline figures, the underlying asset classes and supply dynamics must be examined.

C&W breaks down its national volume into warehousing leasing, which dominated with 24.3 MSF or a 67% market share, and industrial/factory leasing, which reached 11.9 MSF or a 33% share. 

While warehousing achieved 11% year-on-year growth, its activity moderated by 6% compared to H2 2025. Conversely, industrial space experienced a dramatic 36% year-on-year expansion and a 27% increase over the previous six-month period, highlighting manufacturing-led spatial expansion.

On the supply side, fresh completions outpaced absorption. Savills notes that total new completions surged by 27.8% year-on-year to 42.7 MSF, exceeding national park absorption (34.8 MSF) by nearly 23%.

This influx elevated total operational stock across Tier-I, Tier-II, and Tier-III markets to 586 MSF, split equally between Grade-A facilities (294 MSF) and Grade-B facilities (292 MSF), and pushed overall national vacancy up slightly to 11.7%.

High-quality Grade-A space accounted for 59% of total national absorption and 55% of fresh supply, reflecting an ongoing structural trend as Grade-A stock has expanded at an 18.8% compound annual growth rate since 2020.

However, regional supply composition revealed significant structural contrasts: Hyderabad and Ahmedabad registered 100% Grade-A supply additions, while Chennai recorded 91% Grade-A completions. In contrast, speculative Grade-B deliveries formed the majority of fresh supply in Pune (69% Grade-B) and Delhi-NCR (61% Grade-B).

This structural migration toward Grade-A stock is further reinforced by global occupiers enforcing strict ESG underwriting criteria, while rising land costs and execution bottlenecks continue to accelerate platform consolidation toward REIT and InvIT listings.

► Policy, Power, and Progress

This operational resilience unfolded against a solid economic backdrop, with real GDP expanding by 7.7% in FY26, including a 7.8% expansion in the fourth quarter, and projections for FY27 GDP growth estimated at 6.5% to 6.8%. 

India's fiscal and external indicators demonstrated stability, marked by a targeted fiscal deficit of 4.3% of GDP for FY27, a fourth-quarter FY26 current account surplus of USD 7.1 billion, or 0.7% of GDP, and a full-year FY26 current account deficit of USD 25.2 billion, or 0.6% of GDP. 

Both the Manufacturing and Services Purchasing Managers' Index remained above the 50-point expansion threshold through June 2026. Additionally, record gross GST collections reached INR 2.42 lakh crore in April 2026, and foreign exchange reserves settled at USD 686.3 billion after peaking at USD 728.5 billion. 

Monetary indicators remained stable, with Consumer Price Index inflation rising modestly from 2.7% to 3.9%, and the Reserve Bank of India (RBI) maintaining a neutral stance by holding the repo rate steady at 5.25%. 

These strong domestic fundamentals enabled the sector to weather global macroeconomic volatility, including geopolitical conflicts in West Asia, fluctuating Brent crude oil prices that briefly touched USD 120 per barrel, and currency movements bringing the Indian Rupee to INR 96 per US dollar. 

Expansion was further bolstered by comprehensive central frameworks like PM Gati Shakti and targeted government schemes, including the INR 1.3 lakh crore India Semiconductor Mission 2.0, the INR 33,660 crore Bharat Audyogik Vikas Yojna to construct 100 plug-and-play industrial parks, the INR 62,500 crore Mobile Phone Manufacturing Scheme, the INR 10,000 crore Biopharma SHAKTI allocation, and the INR 10,000 crore Container Manufacturing Assistance Scheme. 

Regional policy frameworks, including the Delhi EV Policy, Viksit Gujarat Industrial Policy, Make in Haryana Industrial Policy, Tamil Nadu Warehousing Policy, and Telangana Next-Gen Life Sciences Policy, provided additional local momentum.

► Sectoral Demand Drivers

Demand drivers across both consultancies demonstrate strong occupier activity, though reported sectoral shares present a methodological variance based on tracking definitions.

C&W reports that third-party logistics (3PL) operators maintained market leadership with 12.2 MSF or 34% of total leasing, reflecting a 64% year-on-year surge, while Engineering & Manufacturing captured 28% with 10.2 MSF. Together, these two sectors generated over 60% of total leasing volume in C&W's analysis.

C&W also singles out the automotive sector as a key growth catalyst, capturing a 13% market share with 4.8 MSF leased due to accelerated investments across the electric vehicle supply chain. 

The remainder of C&W's tracking was distributed among e-commerce (8%), fast-moving consumer goods (FMCG) (6%), consumer durables (4%), retail (3%), pharmaceuticals (1%), and other sectors (4%).

Conversely, Savills identifies manufacturing as the primary driver of market volume at 30% of total absorption, followed by 3PL at 23%, FMCG and fast-moving consumer durables combined at 18%, e-commerce at 10%, retail at 4%, and niche segments - including cold storage, chemical storage, free trade warehousing zones (FTWZs), and urban warehousing - capturing 15%.

Consequently, 3PL and manufacturing combined accounted for 53% of overall park absorption in Savills' tracking, illustrating how forward leasing commitments (captured early by C&W) compare against completed park move-ins (tracked by Savills) as projects reach completion over time.

► Regional Analysis

Geographically, Delhi-NCR established itself as India's premier industrial market across both studies, However, city-level metrics displayed differing directional signals across other major urban hubs based on construction delivery schedules and lease sign-off dates. 

Delhi-NCR

According to C&W, Delhi-NCR logged 8.7 MSF in gross volume, a 69% year-on-year increase, and Savills recorded 6.8 MSF in physical absorption with a local vacancy rate of 13.5%, wherein Gurugram drove over 55% of local activity. 

Occupier demand across Delhi-NCR was driven by 3PL operators capturing 23%, FMCG/FMCD at 20%, manufacturing at 15%, and e-commerce at 12%. Gurugram maintained its market leadership by driving over 55% of total supply and absorption, while Noida and Ghaziabad collectively contributed 27% of new completions and 25% of net park take-up. 

Fresh completions surged by 44.1% year-on-year to 8.5 MSF, expanding total operational stock to 119.2 MSF and pushing local vacancy up slightly to 13.5%. Monthly rents varied by sub-market and asset type, ranging from INR 18 to INR 25 per sq ft for warehousing in Gurugram up to INR 45 per sq ft for industrial manufacturing space. 

Backed by ongoing infrastructure expansion and the operationalisation of Noida International Airport, full-year supply and absorption across Delhi-NCR are projected to exceed 12.0 MSF in 2026.

Chennai

In Chennai, C&W logged 6.1 MSF with 39% year-on-year growth driven by an all-time record in industrial leasing of 3.8 MSF. In contrast, Savills recorded a flat year-on-year physical absorption rate of 3.1 MSF, which, when paired with a 73.8% surge in fresh supply, explained why local vacancy spiked by 590 basis points to 23.1%. 

Manufacturing remained the primary catalyst for Chennai's market volume, capturing 52% of physical absorption, followed by 3PL at 19%, and e-commerce at 9%. The Bangalore Highway (NH-48) and GNT Road corridors dominated local activity, together capturing 79% of fresh supply, and 91% of net park absorption. 

High-specification Grade-A developments established complete market dominance, representing 91% of new completions, and 72% of total absorption, elevating total operational stock to 62.1 MSF. Rents varied across sub-markets, peaking along GST Road at INR 28 to INR 38 per sq ft monthly. 

With support from strong automotive, electronics, and heavy engineering ecosystems, both full-year supply and absorption across Chennai are projected to surpass 5.0 MSF in 2026.

Mumbai

Mumbai presented differing dynamics due to tracking perimeters. C&W reported a 33% year-on-year contraction in fresh transaction activity to 4.7 MSF due to a bottleneck in ready industrial supply, whereas Savills noted physical absorption of 5.5 MSF.

This reflects a 5.8% year-on-year expansion and a 12.2% vacancy rate as past construction completions in Bhiwandi were finally occupied, largely driven by the FMCG and fast-moving consumer durables sectors, which constituted 38% of local demand. 

A dramatic surge in FMCG and FMCD requirements underpinned this absorption growth, capturing 38% of total demand compared to 13% a year earlier, with 3PL and e-commerce taking 22% and 15% respectively. 

Bhiwandi retained its overwhelming market supremacy by generating 91% of both new completions and physical space take-up, while Grade-A specification assets captured 88% of overall park absorption. 

A 35.8% year-on-year expansion in new supply added 7.2 MSF, bringing total operational stock across the Mumbai Metropolitan Region (MMR) to 88.2 MSF. Asking rents reflected significant sub-market variation, spanning from INR 28 to INR 38 per sq ft monthly in Bhiwandi up to INR 120 per sq ft in prime industrial pockets like Thane. 

Major infrastructure initiatives, including the Mumbai Trans Harbour Link (MTHL) and Dedicated Freight Corridor (DFC), are set to reinforce long-term logistics efficiency, with full-year 2026 supply projected to exceed 15.0 MSF and absorption expected to surpass 13.0 MSF.

Pune

Pune revealed an instance of lagged occupancy, standing as the only market where Savills' net physical absorption of 6.1 MSF exceeded C&W's gross leasing volume of 5.9 MSF. 

This variance broke the overarching national pattern as tenants moved into Grade-A facilities that had been pre-leased in prior periods, driving local vacancy down to just 3.2% as manufacturing occupiers overwhelmingly dominated with an 80% share of demand, heavily concentrated in the Chakan-Talegaon corridor, which maintained its position as the dominant hub by capturing 82% of new completions and 79% of net park absorption.

Heavy industrial output across automotive, EV, engineering, and electronics segments cemented manufacturing as the market's primary growth engine with an 80% demand share, whereas 3PL operators captured 12%. 

Fresh supply additions grew 10.3% year-on-year to 6.4 MSF, expanding total operational stock to 65.4 MSF, whilst robust space take-up tightened local vacancy by 150 basis points to 3.2%. 

Asking rents experienced upward pressure from land acquisition costs, ranging between INR 22 and INR 35 per sq ft monthly in Chakan-Talegaon up to INR 70 per sq ft in prime PCMC industrial clusters. 

Propelled by ongoing manufacturing expansion and activity in emerging corridors like Ranjangaon and Shirwal, total annual absorption across Pune is projected to exceed 10.0 MSF in 2026.

Kolkata

In Kolkata, C&W registered 2.1 MSF in gross transactions, a 6% year-on-year increase propelled by new industrial leases, whereas Savills reported a drop in physical absorption to just 0.3 MSF and a 7.3% vacancy rate, representing a 72.7% decline in volume. 

This gap highlights Savills' strict focus on high-specification, Grade-A and Grade-B institutional park move-ins where ready supply was nearly exhausted, compared to C&W's inclusion of non-park and unorganised manufacturing facilities. 

3PL logistics operators overwhelmingly anchored park take-up in Kolkata, capturing 65% of net absorption, while the NH-16 and NH-19 corridors exclusively absorbed 100% of all fresh supply and physical space transactions. 

A delivery of 0.8 MSF in new completions lifted total operational stock to 44.4 MSF, with persistent scarcity in ready-to-occupy Grade-A inventory nudging local vacancy down to 7.3%. Monthly warehousing rents remained stable across major sub-markets, ranging from INR 17 to INR 26 per sq ft along NH-16. 

Supported by an expanding institutional development pipeline, Kolkata's full-year outlook anticipates supply reaching approximately 4.0 MSF and absorption exceeding 3.5 MSF in 2026.

Hyderabad

In Hyderabad, both consultancies recorded overall market contractions, but beneath the surface, Savills highlighted a massive sectoral shift as e-commerce jumped to 42% of total local absorption, up drastically from 9% in the first half of 2025, operating within a very tight market boasting a mere 1.8% vacancy rate. 

In terms of volume, C&W tracked 2.1 MSF in corporate transactions in Hyderabad, while Savills recorded 0.6 MSF in completed park move-ins. 

The sectoral surge in e-commerce, which captured 42% of local absorption, was closely supported by manufacturing at 37%, with high-specification Grade-A developments representing 100% of both fresh supply and net park take-up. Airport-led connectivity established Shamshabad as the primary sub-market anchor, contributing 100% of total new completions and 85% of physical absorption. 

Fresh supply additions of 0.4 MSF elevated total operational stock to 28.9 MSF, while demand outpacing completions pulled overall local vacancy down to a tight 1.8%. Monthly rents experienced marginal increases for compliant Grade-A space, spanning from INR 20 to INR 36 per sq ft across sub-markets. 

Driven by life sciences, pharmaceuticals, e-commerce, and 3PL expansion, both full-year supply and absorption across Hyderabad are projected to exceed 3.5 MSF in 2026.

Bangalore

In Bangalore, C&W registered 4.4 MSF with a 33% year-on-year jump, whereas Savills reported 3.6 MSF in physical absorption with a 9.1% growth rate and a 15.1% vacancy rate, centred around Hoskote and Tumkur Road. 

Manufacturing occupiers spearheaded this local growth with a 41% share of absorption, followed by 3PL operators at 33%, with Hoskote and Tumkur Road serving as primary sub-market anchors that together generated 73% of total absorption and 67% of new completions. 

Fresh supply expanded by 73.3% year-on-year to reach 5.2 MSF, elevating operational stock to 69.8 MSF and lifting local vacancy to 15.1% as completions outpaced demand. Occupier preference continued to favour quality, with Grade-A facilities accounting for 57% of total net absorption. 

Supported by major infrastructure projects including the Satellite Town Ring Road (STRR) and the Bangalore-Chennai Industrial Corridor (BCIC), both full-year supply and absorption across Bangalore are projected to exceed 10.0 MSF in 2026.

Ahmedabad

In Ahmedabad, C&W logged 2.2 MSF in commitments, whereas Savills recorded 1.2 MSF in park absorption, representing a 71.4% year-on-year surge alongside a 12.6% vacancy rate, with Grade-A space accounting for 100% of local activity.

This local momentum was spearheaded by 3PL operators capturing 22% of demand, FMCG/FMCD at 20%, e-commerce at 16%, and manufacturing at 10%. The primary hubs of Aslali-Kheda and Changodar-Bavla served as the market's main anchors, collectively generating 80% of fresh supply and 67% of total physical absorption. 

Total operational stock expanded to 24.8 MSF following 0.9 MSF of new Grade-A completions, while monthly rents held steady between INR 18 and INR 31 per sq ft across key sub-markets. 

Backed by strategic placement along the DMIC corridor and robust multimodal links, full-year supply and absorption across Ahmedabad are projected to surpass 3.0 MSF in 2026.

► Future Outlook

Despite variations between Cushman & Wakefield's forward-looking tracking of corporate expansion commitments and Savills' measurement of immediate park move-ins, both datasets confirm an ongoing shift toward modern infrastructure. 

Core industrial corridors, including Gurugram in Delhi-NCR, Bhiwandi in Mumbai, Chakan-Talegaon in Pune, Hoskote in Bengaluru, and the Bangalore Highway in Chennai, continue to absorb the vast majority of fresh space. 

Looking ahead to the second half of 2026, bolstered by bilateral trade agreements such as the India-New Zealand Free Trade Agreement, expanding multimodal infrastructure, warehouse automation (projected to reach 76% adoption by 2030), and anticipated seasonal demand from retail, consumer, and automotive occupiers, the Indian industrial and logistics sector remains well-positioned for sustained growth.
 

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► Continue the conversation on the Indian industrial and logistics sector at upcoming GRI Institute India events:

• India GRI 2026 - 8th October - Mumbai - Summit
  • Featuring a dedicated Warehousing panel discussion
• GRI Warehousing & Logistics India 2026 - 25th November - Mumbai - Conference
  • A full day of discussions with the leading players from across the country

 

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Sources:
H1 2026 Logistics & Industrial MarketBeat - Cushman & Wakefield
Industrial & Logistics Market Watch India H1 2026 - Savills
Indian Real Estate Outlook H2 2026 - GRI Institute