Mumbai dominated India’s warehousing market in Q1 2026, accounting for a 42 per cent share as total absorption touched 11.4 million sq ft. While western markets drove growth, investment inflows dropped sharply even as the long-term outlook remained positive, ANI reported.
Absorption rises quarterly, dips annually
According to the latest sector review report by Vestian, the industry recorded total absorption of 11.4 million sq ft during the first quarter of the year. “While absorption increased by 8 per cent over the previous quarter, it declined by 14 per cent year-on-year,” the report said.
Western markets drive majority share
Growth remains heavily concentrated in western markets, with Mumbai and Pune together accounting for 81 per cent of pan-India absorption, the news agency reported.
As per the report, Pune’s market share surged to 39 per cent in Q1 2026, up from 16 per cent in the previous quarter. This marks the city’s highest-ever quarterly contribution, driven by the closure of several large-scale transactions.
Bhiwandi emerges as key growth hub
In Mumbai, the Bhiwandi micro-market remains the primary growth driver, contributing 69 per cent of the city’s total absorption and 30 per cent of the country’s overall leasing volume.
Recovery signals improving occupier confidence
“Following a sharp 58 per cent quarterly decline in Q2 2025, absorption has shown a gradual recovery in subsequent quarters. This steady upward trajectory indicates improving occupier confidence, largely driven by demand from 3PL, engineering and manufacturing, and consumer goods and services sectors,” the report stated.
Rental values remain stable across cities
The rental landscape across the top seven cities remains largely stable, with weighted average rentals ranging between Rs 20 and Rs 29 per sq ft per month. Chennai recorded the highest rental at Rs 29 per sq ft per month after a sharp 22 per cent quarterly increase, marking the strongest growth among leading cities.
NCR, Kolkata see slowdown in activity
Conversely, regions such as the National Capital Region (NCR) and Kolkata saw a significant drop in activity. NCR’s share of absorption fell to 6 per cent from 17 per cent in the previous quarter, while Kolkata’s leasing volume dropped to negligible levels following the completion of major deals in earlier months.
Investment inflows see sharp decline
“Institutional investments may witness a gradual recovery after the temporary slowdown in Q1 2026, as investors continue to focus on income-generating logistics parks and strategically located warehousing assets with strong tenant covenants,” the report added.
The investment climate cooled significantly during the quarter, with the sector attracting only USD 22 million in institutional capital, marking a 96 per cent decline compared to the end of 2025.
Long-term outlook remains positive
Despite this slowdown, the long-term outlook remains positive, supported by government initiatives such as PM Gati Shakti and the National Logistics Policy.
The report stated, “Overall, the outlook for the warehousing and logistics sector remains positive, backed by policy support, technology adoption, e-commerce penetration, manufacturing expansion, and the growing need for efficient nationwide supply chain networks.”
(With ANI inputs)
