Manufacturing, 3PL lift India warehousing leasing 15% to 36.8 million sq. ft. in H1 2026; Mumbai hits record high : Knight Frank India

India's industrial and warehousing sector recorded a 15% year-on-year (YoY) increase in leasing activity to 36.8 million sq. ft. in the first half of 2026, driven by manufacturing expansion and growing adoption of third-party logistics (3PL), according to Knight Frank India's latest India Warehousing Market Report – H1 2026.

Despite geopolitical disruptions, elevated freight costs, currency volatility and supply-chain pressures, leasing across India's eight major industrial and warehousing markets rose from 32.1 million sq. ft. in H1 2025 to 36.8 million sq. ft. in H1 2026. The completion of the Western Dedicated Freight Corridor and continued infrastructure investment helped support occupier confidence, the report said.

Mumbai records best-ever half-year leasing

Mumbai emerged as the strongest market, recording 10.7 million sq. ft. of transactions, its highest-ever half-yearly volume and a 44% YoY jump. The city accounted for nearly 29% of total leasing across the eight markets.

NCR followed with 5.9 million sq. ft., up 17%, while Bengaluru recorded 4 million sq. ft., marking 36% growth. Ahmedabad grew 15% to 4.1 million sq. ft., while Kolkata posted the fastest percentage growth, with transactions rising 69% to 2.4 million sq. ft.

In contrast, leasing declined 12% in Pune, 27% in Chennai and 10% in Hyderabad. Chennai's softer performance was linked to limited Grade A availability, while Hyderabad continued to face elevated vacancy.

Manufacturing, 3PL account for three-fourths of demand

Manufacturing remained the largest occupier segment, accounting for 46% of total leasing at 17 million sq. ft., up 17% YoY. Automotive, engineering, electronics and energy companies were among the key demand drivers.

3PL emerged as the second-largest segment, with 11.1 million sq. ft., representing 30% of total leasing and a 27% YoY increase. Retail leasing rose 70% to 2.5 million sq. ft., while e-commerce declined 44% to 1.9 million sq. ft.

Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India, said India's industrial and warehousing market had demonstrated "structural resilience" despite global disruptions. He added that manufacturing remained the primary demand driver, while 3PL expansion reflected the increasing outsourcing and efficiency-led transformation of supply chains.

India's industrial and warehousing stock rose 14% YoY to 584.9 million sq. ft., while vacancy improved to 11.4% from 12.1% a year earlier. Grade A assets accounted for 47% of total stock.

Rental values also increased across all eight markets. Chennai recorded the highest annual growth of 7%, with rents reaching ₹25.7 per sq. ft. per month, while Pune remained the most expensive market at ₹28.7 per sq. ft. per month.