Mumbai, November 05, 2026: India’s warehousing market recorded a 12% year-on-year increase in leasing during Q3 2026, with total transactions across eight primary cities reaching 19.1 million square feet, according to Knight Frank India’s latest India Warehousing Market Report.
Manufacturing and third-party logistics (3PL) occupiers together accounted for 76% of the quarterly demand, underscoring the sector’s reliance on domestic production and outsourced logistics. Grade A facilities made up 66% of Q3 2026 leasing, up from 56% in the same period last year.
City-wise leasing and rental trends
Among the eight cities—Mumbai, Delhi-NCR, Bengaluru, Chennai, Hyderabad, Pune, Ahmedabad, and Kolkata—Mumbai led with 15.5 mn sq ft of leasing year-to-date (YTD) through Q3 2026, up 55% year-on-year. NCR followed with 10.1 mn sq ft (14% growth), while Bengaluru and Ahmedabad saw increases of 25% and 20% respectively. Pune and Chennai recorded declines of 23% and 11% YTD, though Chennai’s Q3 leasing rose 18% year-on-year to 2.7 mn sq ft, accounting for 22% of national manufacturing demand.
Average warehousing rentals rose between 3% and 5% across all eight markets in Q3 2026. Mumbai, Bengaluru, and NCR each saw 5% annual rental growth, with Pune maintaining the highest average rent at INR 28.9 per sq ft per month. Hyderabad posted the smallest rental increase at 3% amid a 17.4% vacancy rate.
Industry-wise demand and market drivers
Manufacturing leasing, excluding FMCG and FMCD, grew 11% year-on-year in Q3, driven by sustained requirements from automotive, engineering, consumer durables, and electrical equipment firms. 3PL leasing surged 27% year-on-year, reflecting increased outsourcing of warehousing and distribution operations. E-commerce leasing rose 5% in Q3, while FMCG and FMCD leasing jumped 101% and 43% respectively, indicating higher storage needs ahead of the festive season.
On a YTD basis, other manufacturing accounted for 25.5 mn sq ft (15% growth), 3PL for 17.1 mn sq ft (27% growth), and e-commerce for 4.5 mn sq ft (down 23%). Retail leasing expanded 42% to 2.8 mn sq ft, while FMCG and FMCD reached 2.5 mn sq ft (12% growth) and 1.8 mn sq ft (14% growth) respectively.
Geographical shifts and stock expansion
Pune and Chennai together contributed 32% of manufacturing leasing in the first nine months of 2026, down from 45% a year earlier, as Mumbai, Bengaluru, Hyderabad, and Kolkata collectively added 4.4 mn sq ft of manufacturing leasing. Manufacturing leasing volumes rose 159% year-on-year in Kolkata and 99% in Hyderabad YTD, indicating a broader geographical spread of industrial activity.
India’s total industrial and warehousing stock across the eight markets reached 597.7 mn sq ft in Q3 2026. Mumbai and NCR together accounted for 53% of this stock. Vacancy rates varied, with Kolkata the lowest at 8.7% and Bengaluru and Hyderabad above 17%.
Preference for Grade A facilities and sectoral developments
Grade A facilities accounted for 66% of total leasing in Q3 2026, compared to 56% in Q3 2025. These facilities now represent 48% of total warehousing stock, with Chennai (78%) and Pune (69%) having the highest shares. Mumbai and NCR have a larger proportion of Grade B facilities.
The sector is seeing increased institutional participation, highlighted by the August 2026 listing of Blackstone-backed Horizon Industrial Parks following a fundraise of INR 2,600 crore.
“India’s warehousing market is being shaped by two important shifts, the expansion of domestic manufacturing and the growing role of specialised logistics providers. Together, these segments accounted for 76% of leasing in Q3 2026, signalling how production and distribution requirements are influencing demand,” said Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India.
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