Industrial Demand Touches 34.8 Million Sq Ft: Savills

03 Jul 2026 CW Team

Manufacturing accounted for 30 per cent of total absorption, followed by 3PL at 23 per cent, FMCG and FMCD at 18 per cent, and e-commerce at 10 per cent, reflecting broad-based demand across key occupier segments. Tier-I cities continued to dominate with 78 per cent of total absorption, while Tier-II and III cities contributed 22 per cent.

“India’s manufacturing ecosystem is rapidly evolving into a globally integrated ‘Made for India and the World’ platform. Supported by proactive trade agreements and rising investments, this shift is driving strong demand for industrial and logistics real estate,” said Srinivas N, Managing Director, Industrial and Logistics, Savills India.

Fresh supply rose sharply by 27.8 per cent year-on-year to 42.7 million sq ft, with Tier-I cities accounting for 36.7 million sq ft, or 86 per cent of total completions. Tier-II and III cities contributed 6 million sq ft, representing 14 per cent of new supply.

Delhi-NCR emerged as the largest market, contributing 20 per cent of total absorption, followed by Pune (17 per cent) and Mumbai (16 per cent). On the supply side, Delhi-NCR also led with a 20 per cent share, ahead of Mumbai and Chennai at 17 per cent each.

The report also highlighted a growing preference for higher-quality industrial assets. Grade-A warehouses accounted for 59 per cent of total absorption in H1 2026, up from 55 per cent a year earlier, driven by increasing compliance requirements and environmental, social and governance (ESG) considerations.

Looking ahead, Savills India expects the sector to maintain stable, demand-led growth, supported by manufacturing expansion, supply chain diversification, rising domestic consumption and continued investment in logistics infrastructure. Rental values for compliant Grade-A assets are expected to witness moderate appreciation, while yields are likely to remain stable, reinforcing the sector's attractiveness for both domestic and global investors.

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India's industrial and warehousing sector recorded 34.8 million sq ft of absorption during the first half of 2026, registering a modest 2.4 per cent year-on-year increase, according to Savills India. While demand growth moderated, the market remained resilient, supported by manufacturing, third-party logistics (3PL), and fast-moving consumer goods (FMCG) occupiers.Manufacturing accounted for 30 per cent of total absorption, followed by 3PL at 23 per cent, FMCG and FMCD at 18 per cent, and e-commerce at 10 per cent, reflecting broad-based demand across key occupier segments. Tier-I cities continued to dominate with 78 per cent of total absorption, while Tier-II and III cities contributed 22 per cent.“India’s manufacturing ecosystem is rapidly evolving into a globally integrated ‘Made for India and the World’ platform. Supported by proactive trade agreements and rising investments, this shift is driving strong demand for industrial and logistics real estate,” said Srinivas N, Managing Director, Industrial and Logistics, Savills India.Fresh supply rose sharply by 27.8 per cent year-on-year to 42.7 million sq ft, with Tier-I cities accounting for 36.7 million sq ft, or 86 per cent of total completions. Tier-II and III cities contributed 6 million sq ft, representing 14 per cent of new supply.Delhi-NCR emerged as the largest market, contributing 20 per cent of total absorption, followed by Pune (17 per cent) and Mumbai (16 per cent). On the supply side, Delhi-NCR also led with a 20 per cent share, ahead of Mumbai and Chennai at 17 per cent each.The report also highlighted a growing preference for higher-quality industrial assets. Grade-A warehouses accounted for 59 per cent of total absorption in H1 2026, up from 55 per cent a year earlier, driven by increasing compliance requirements and environmental, social and governance (ESG) considerations.Looking ahead, Savills India expects the sector to maintain stable, demand-led growth, supported by manufacturing expansion, supply chain diversification, rising domestic consumption and continued investment in logistics infrastructure. Rental values for compliant Grade-A assets are expected to witness moderate appreciation, while yields are likely to remain stable, reinforcing the sector's attractiveness for both domestic and global investors.

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