“India’s industrial and logistics sector is expected to witness steady growth in 2026, supported by manufacturing expansion and sustained demand from 3PL, FMCG/FMCD, retail, and e-commerce occupiers.”
India’s industrial and logistics sector continued its growth trajectory, witnessing 24.3 mn sq. ft. of absorption in Q3 2026, with a YoY growth of 14.1%. Tier-I cities continued to dominate absorption, accounting for 19.9 mn sq. ft. and an 82% share of the total absorption, while Tier-II and III cities contributed 4.4 mn sq. ft. (18%). Cumulative absorption during the first nine months of 2026 reached 59.1 mn sq. ft., up 6.9% YoY, according to international real estate advisory firm Savills India.
On the supply front, fresh completions totaling 26.2 mn sq. ft. were added in Q3 2026, representing a 21.3% YoY growth, highlighting the robust supply pipeline and continued market expansion.
Tier-I cities contributed the bulk of the supply with 19.2 mn sq. ft. (73% share), while Tier-II and III markets added 6.9 mn sq. ft. (27%).
The growing emphasis on quality infrastructure, compliance requirements, and ESG considerations has significantly boosted demand for Grade-A space in recent years. As a result, Grade-A absorption rose to 66% in Q3 2026, up from 52% in Q3 2025.
Driven by sustained expansion, the manufacturing segment strengthened its contribution to total absorption, reaching 31% in Q3 2026 compared to 27% in Q3 2025. The 3PL segment maintained strong momentum, contributing 26% of total absorption in Q3 2026, while the retail segment strengthened its presence, increasing its share from 5% in Q3 2025 to 12% in Q3 2026.
Delhi-NCR remained as the leading market, accounting for 20% of total absorption in Q3 2026, followed by Bengaluru at 16%, Mumbai and Pune at 14% and 13% respectively. The Tier-II & III cities together accounted for 18% of the total absorption. In terms of supply, Pune emerged as the highest contributor, accounting for 18% in Q3 2026, followed by Delhi-NCR and Mumbai each at 15%, while the Tier-II & III cities together accounted for 27% of the total supply.
India’s industrial and logistics sector is expected to witness steady growth in 2026, supported by manufacturing expansion and sustained demand from 3PL, FMCG/FMCD, retail, and e-commerce occupiers. Rising consumption, supply chain realignment, and growing activity in Tier-II and III cities will continue to drive demand. Rental values for Grade-A assets are likely to see a mild uptick, while stable yields and strong investor interest are expected to reinforce the sector’s attractiveness as a resilient and scalable asset class.
