India’s industrial and logistics real estate market recorded absorption of 24.3 million square feet in the third quarter of 2026, registering year-on-year growth of 14.1%, according to property advisory firm Savills India. Cumulative absorption during the first nine months of the year reached 59.1 million square feet, an increase of 6.9% compared with the corresponding period in 2025.
The market continued to see demand from manufacturing companies, third-party logistics (3PL) operators, retailers and other occupiers seeking industrial facilities and warehouse space. Fresh supply also increased during the quarter, with completions reaching 26.2 million square feet, up 21.3% year-on-year.
“India’s industrial and warehousing sector is entering a defining phase, with 2026 expected to set new benchmarks in both demand and supply. With India is strengthening its position as a preferred manufacturing, distribution and export hub, the sector is evolving beyond a cost-led proposition towards a resilient, innovation-driven ecosystem anchored in supply chain efficiency, competitiveness and long-term sustainable growth. The next phase of growth will be defined not only by scale but also by geographic diversification, with industrial activity expanding across 20+ Tier-I and II cities and gaining momentum in over 25 Tier-II and III markets”, said Srinivas N, Managing Director, Industrial & Logistics, Savills India.”
Tier-I cities accounted for 19.9 million square feet, representing 82% of total absorption in Q3 2026. Tier-II and Tier-III cities contributed 4.4 million square feet, or 18% of the total. On the supply side, Tier-I markets added 19.2 million square feet, accounting for 73% of quarterly completions. Tier-II and Tier-III markets contributed 6.9 million square feet, representing the remaining 27%.
The manufacturing segment increased its share of total absorption to 31% in Q3 2026 from 27% in the same quarter last year. The 3PL segment accounted for 26% of absorption, reflecting continued demand for warehousing and distribution facilities. Retail also strengthened its contribution, with its share of absorption rising to 12% in Q3 2026 from 5% in Q3 2025.
Demand for Grade-A industrial and logistics facilities continued to increase as occupiers placed greater emphasis on infrastructure quality, regulatory compliance and environmental, social and governance (ESG) requirements. Grade-A properties accounted for 66% of absorption during the quarter, compared with 52% a year earlier.
Delhi-NCR was the largest market for industrial and logistics absorption in Q3 2026, accounting for 20% of the total. Bengaluru followed with 16%, while Mumbai and Pune contributed 14% and 13%, respectively. Pune led new supply during the quarter, accounting for 18% of total completions. Delhi-NCR and Mumbai each contributed 15%. Tier-II and Tier-III cities together accounted for 27% of new supply, highlighting the continued expansion of industrial and logistics infrastructure beyond major metropolitan markets.
The sector is expected to maintain steady growth through 2026, supported by manufacturing expansion and demand from 3PL, fast-moving consumer goods, consumer durables, retail and e-commerce businesses. Rising consumption, changes in supply chains and increased activity in smaller cities are also expected to support demand.
Rental values for Grade-A facilities are likely to see a moderate increase, while stable yields and investor interest are expected to support the sector’s growth. Savills is a global property advisory firm headquartered in London, with more than 40,000 people working across over 700 offices worldwide. Savills India operates from offices in Bengaluru, Mumbai, Delhi NCR, Chennai, Pune, Hyderabad, Ahmedabad and Kolkata.
The company provides leasing, advisory, transactions, project management, capital markets, valuation and research services across commercial, industrial, warehouse, logistics, data centre and residential real estate markets. The latest figures highlight the continued expansion of India’s industrial and logistics property market, with demand extending across major cities and emerging industrial locations.
