Mumbai and Pune Drive 81% of India's Warehousing Surge in Q1 2026

According to the latest sector review report by Vestian, the industry recorded a total absorption of 11.4 million sq ft during the first quarter of the year. "While the absorption increased by 8% over the previous quarter, it declined by 14% annually," the report said.

The growth remains heavily concentrated in the western markets, where Mumbai and Pune together account for 81 per cent of the pan-India absorption. As per the report, Pune's market share surged to 39 per cent in Q1 2026, a spike from the 16 per cent recorded in the previous quarter. This performance is the highest quarterly contribution on record for the city, fueled by the conclusion of several large-scale transactions.

In Mumbai, the Bhiwandi micro-market remains the primary engine of growth, contributing 69 per cent of the city's total absorption and 30 per cent of the entire country's leasing volume.

"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 & Manufacturing, and Consumer Goods & Services sectors," the report stated.

The rental landscape across the top seven cities remains largely stable, with weighted average values ranging between Rs 20-29 per sq ft per month. Chennai recorded the highest rental at Rs 29 per sq ft per month, following a sharp 22 per cent quarterly increase, marking the strongest growth among leading cities.

Conversely, regions like 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 prior months.

"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 mentioned

The investment climate cooled significantly during the quarter, with the sector attracting only USD 22 million in institutional capital, a 96 per cent decline compared to the close of 2025.

Despite this lull, 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 rising need for efficient nationwide supply chain networks."

- ANI