India's logistics and industrial real estate leasing grew 18% to a record 36.2 million square feet in the first half of 2026. High demand from manufacturing and auto sectors drove the growth, signaling expansion despite global uncertainty. Investors should watch how this demand sustains through the second half, especially for major logistics hubs.
The Indian logistics and industrial real estate market recorded its strongest ever first-half performance in 2026, with gross leasing volume reaching 36.2 million square feet (msf) between January and June. This represents an 18% increase compared to the same period in the previous year, showing sustained interest from companies looking to expand their manufacturing and distribution footprints within the country.
Manufacturing and Auto Sectors Lead Demand
A major portion of this growth was driven by a rise in industrial activity, which saw a 36% year-on-year increase in leasing, totaling nearly 12 msf. The automotive sector was a standout performer, nearly doubling its leasing footprint to 4.8 msf. This trend is closely linked to ongoing investments in electric vehicle supply chains and broader manufacturing expansion. Third-party logistics (3PL) providers also played a key role, leasing 12.2 msf, which reflects a 64% surge from the previous year. This indicates that businesses are increasingly outsourcing their supply chain needs to specialized operators to improve efficiency.
Regional Leasing Trends
Performance across key Indian cities remained varied. Delhi-NCR emerged as the top market, absorbing 8.7 msf, which is a significant 69% increase compared to the previous year. Chennai and Pune also saw strong growth, with leasing volumes rising by 39% and 32% respectively. Meanwhile, Mumbai and Bengaluru maintained steady activity. In contrast, Hyderabad was the only major city to experience a decline, with leasing activity dropping by 21% to 2.1 msf.
What Investors Should Monitor
While the first half of 2026 has shown strong growth, the sustainability of this trend will depend on several factors. The sector traditionally sees increased activity in the second half due to seasonal demand from the e-commerce and retail industries. However, investors may monitor potential risks such as global geopolitical events and fluctuations in trade, which could influence the speed of future industrial expansions. Additionally, while the overall demand is high, the pace of absorption in specific regions like Hyderabad or the ability of developers to manage new supply will be key. Future updates on vacancy rates and rental trends in these major industrial hubs will help provide a clearer picture of long-term profitability for companies operating in the industrial real estate and logistics space.