India's warehousing market recorded leasing of 19.1 million sq ft across eight primary markets in Q3 2026, an increase of 12 per cent year-on-year, according to Knight Frank India's India Warehousing Market Report – Q3 2026. Manufacturing and third-party logistics (3PL) operators remained the key demand drivers, while occupiers continued to favour Grade A facilities.

Manufacturing and 3PL together accounted for 76 per cent of leasing demand during the quarter. Manufacturing leasing, excluding fast-moving consumer goods (FMCG) and consumer durables (FMCD), increased 11 per cent year-on-year, supported by requirements from automotive, engineering, consumer durables and electrical equipment companies. Leasing by 3PL operators rose 27 per cent, reflecting continued outsourcing of warehousing, inventory management and distribution operations.

E-commerce leasing increased 5 per cent year-on-year in Q3, while FMCG and FMCD leasing rose 101 per cent and 43 per cent, respectively, supported by higher storage requirements ahead of the festive season.

For January-September 2026, cumulative leasing across the eight markets reached 55.9 million sq ft, up 14 per cent from the corresponding period last year. Mumbai recorded the highest year-to-date leasing at 15.5 million sq ft, a 55 per cent increase, followed by the National Capital Region (NCR) at 10.1 million sq ft, up 14 per cent.

Manufacturing-led warehousing demand is expanding beyond traditional industrial hubs. Chennai recorded leasing of 2.7 million sq ft in Q3 2026, an 18 per cent year-on-year increase. The city accounted for 22 per cent of national manufacturing leasing during the quarter, the highest share among the eight markets.

Pune and Chennai together accounted for 32 per cent of manufacturing leasing during the first nine months of 2026, down from 45 per cent a year earlier. Mumbai, Bengaluru, Hyderabad and Kolkata collectively added 4.4 million sq ft of manufacturing leasing during the period.

Manufacturing leasing in Kolkata increased 159 per cent year-on-year on a year-to-date basis, while Hyderabad recorded 99 per cent growth. In Bengaluru, manufacturing accounted for 98 per cent of the market's overall leasing growth during the first nine months.

Mumbai and NCR together contributed 99 per cent of incremental leasing across the eight markets during January-September 2026. Mumbai's performance was supported by its logistics infrastructure, availability of large warehousing facilities and proximity to consumption centres and ports. NCR continued to benefit from its position as a distribution base for northern India's consumer markets.

Average warehousing rentals increased by 3-5 per cent year-on-year across all eight markets in Q3 2026. Ahmedabad, Bengaluru, Mumbai and NCR recorded 5 per cent growth. Pune continued to command the highest average rent at Rs 28.9 per sq ft per month, followed by Mumbai at Rs 26.2 and Kolkata at Rs 26.

Hyderabad recorded the lowest rental increase at 3 per cent, while its vacancy stood at 17.4 per cent. Mumbai and Bengaluru recorded 5 per cent rental growth despite vacancy levels of 14.7 per cent and 18.5 per cent, respectively. Knight Frank attributed rental appreciation to sustained occupier demand and rising land and construction costs, as well as the availability of Grade A space in strategic locations.

The total industrial and warehousing stock across the eight markets reached 597.7 million sq ft in Q3 2026. Mumbai and NCR together accounted for 53 per cent of this stock. Overall vacancy stood at 11.5 per cent, with Kolkata recording the lowest level at 8.7 per cent, followed by Chennai at 10.3 per cent.

Grade A facilities accounted for 66 per cent of quarterly leasing, compared with 56 per cent in Q3 2025. They represented 48 per cent of the total warehousing stock across the eight markets. Chennai had the highest Grade A share at 78 per cent, followed by Pune at 69 per cent. Mumbai and NCR had relatively lower shares, at 37 per cent and 39 per cent, respectively.

The sector is also seeing increased participation from institutional investors and warehousing platforms. The listing of Blackstone-backed Horizon Industrial Parks in August 2026, following a fundraise of Rs 26 billion, was cited by Knight Frank as an indication of the growing maturity of India's industrial and warehousing asset class.