The report stated that the sector recorded a total warehousing absorption of 11.4 million square feet during Q1 2026. This reflects an 8 percent increase compared to the previous quarter, while still registering a 14 percent year-on-year decline, indicating a gradual but uneven recovery in demand conditions across key markets.
Western India Emerges as the Core Growth Engine
Growth in the warehousing sector remained heavily concentrated in western India, with Mumbai and Pune collectively accounting for 81 percent of total pan-India absorption during the quarter. Pune demonstrated a remarkable surge in performance, increasing its market share to 39 percent in Q1 2026 from 16 percent in the previous quarter. This marks the highest quarterly contribution ever recorded for the city, driven by the completion of multiple large-scale transactions.
In Mumbai, the Bhiwandi micro-market continued to serve as the primary growth hub, contributing 69 percent of the city’s total absorption and accounting for 30 percent of India’s overall leasing activity.
Sector Recovery Driven by Key Industry Segments
The report highlighted that the sector is recovering steadily after experiencing a sharp 58 percent quarterly contraction in Q2 2025. The subsequent quarters have shown a consistent upward trend, reflecting improving occupier confidence. Demand has been primarily driven by third-party logistics operators, engineering and manufacturing firms, and consumer goods and services companies.
Stable Rental Trends with Regional Variations
Rental values across India’s top seven warehousing markets remained largely stable, ranging between INR 20 and INR 29 per square foot per month. Chennai recorded the highest rental level at INR 29 per square foot per month, supported by a sharp 22 percent quarterly increase, making it the strongest-performing city in terms of rental growth.
In contrast, the National Capital Region and Kolkata witnessed a significant slowdown in activity. The National Capital Region’s share of absorption fell sharply to 6 percent from 17 percent in the previous quarter, while Kolkata’s leasing activity declined to negligible levels following the completion of major deals in earlier periods.
Investment Activity Slows but Long-Term Outlook Remains Positive
Institutional investment in the sector witnessed a steep decline during the quarter, falling to USD 22 million, representing a 96 percent drop compared to the end of 2025. Despite this contraction, the long-term outlook remains optimistic.
The report noted that institutional investments are expected to gradually recover, with growing investor interest in income-generating logistics parks and strategically located warehousing assets backed by strong tenant agreements. Government initiatives such as PM Gati Shakti and the National Logistics Policy continue to provide structural support to the sector’s long-term expansion prospects.
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