India's top-tier warehouse leasing grew by 26% to 33.3 million sq ft in the first nine months of 2026, fueled by rising demand from the automotive sector. Major institutional players are heavily investing in logistics assets, but regional trends are shifting, with supply outpacing demand in some cities like Mumbai.
The logistics and warehousing sector in India saw a strong upward trend in the first nine months of 2026. Leasing activity for high-quality, or Grade-A, industrial and warehouse spaces grew by 26% compared to the previous period, with total leasing reaching 33.3 million sq ft. This growth reflects a broader increase in industrial activity, particularly from sectors like automotive and engineering.
Institutional capital continues to flow into this space as investors seek long-term returns from logistics infrastructure. On October 7, Brookfield confirmed a massive commitment of ₹4,300 crore to acquire and develop 10.5 million sq ft of industrial and logistics parks across five key markets. This follows an acquisition strategy seen in late 2025 by IndoSpace Core, which, with support from CPP Investments, invested ₹3,000 crore into six logistics parks. These investments highlight a trend where global capital is aiming to own and operate the infrastructure that supports India’s supply chain.
The demand drivers are becoming more diverse. While third-party logistics (3PL) providers continue to be the largest group of users, accounting for one-third of the total leased space, the automotive sector has shown the most aggressive expansion with a 70% increase in space absorption. Other segments, such as electronics manufacturing and e-commerce, have also contributed to the growth, with both recording a 30% rise in their space requirements.
However, the market is not uniform across the country, and this is where investors should be careful. Regional performance varies significantly. Delhi NCR and Chennai remain the primary hubs, together accounting for nearly half of the national demand. Both markets saw strong leasing growth, rising 26% and 25% respectively. In contrast, cities like Pune and Bengaluru experienced much faster growth, with absorption levels jumping by 70% and 61% respectively.
The situation in Mumbai offers a different perspective that requires attention. Despite a 41% increase in new supply, Mumbai saw a 14% contraction in leasing activity. This creates a potential risk of oversupply, where the amount of available warehouse space grows faster than the demand from companies to rent it. If this trend continues, it could lead to pressure on rental rates or occupancy levels in that specific region.
Looking ahead, market analysts expect a total annual leasing volume of between 40 million and 45 million sq ft for 2026. Whether the market reaches these levels will depend on how well developers balance new supply with the actual needs of companies. Investors should monitor regional supply data and the pace of industrial demand to understand which logistics hubs are performing efficiently and which might face an oversupply risk.