For years, warehousing was the asset class investors tolerated rather than chased. In 2025, it forced a rethink. India’s warehouses absorbed a record 23.4 million square feet in the fourth quarter alone nearly 38.5% above the average of the year’s first three quarters capping the strongest year the sector has ever recorded. Total transacted volume jumped 29% year-on-year to 72.5 million square feet (6.74 million square metres) across the eight primary markets, according to the India Real Estate Report 2026 by PropTech Pulse. That pace ranks India among the fastest-expanding major logistics markets in Asia-Pacific – a world away from the low-single-digit absorption growth typical of mature Western warehouse markets.
Acceleration, Not Just Size
The number that matters isn’t the annual total – it’s the shape of the curve. Absorption climbed every quarter: 15.8 MSF in Q1, 16.4 in Q2, 16.9 in Q3, then a breakout 23.4 MSF in Q4. Year-end corporate space decisions, manufacturing commitments under PLI schemes and a strengthening third-party logistics (3PL) network drove the surge. A market that ends the year accelerating rather than coasting is a market signalling confidence and occupiers spent Q4 voting with their leases.
Demand Drivers: Broad-based, Not Concentrated
No single sector carried the year. Manufacturing and industrial firms took roughly 32% of transacted volume, powered by PLI schemes, export-oriented production and supply-chain localization. 3PL operators followed at ~28%, on outsourced logistics growth and national network expansion. E-commerce and quick-commerce players added ~20% through dark-store expansion, last-mile fulfilment and Tier-II penetration, with FMCG and retail at ~14% and cold-chain, pharma and other occupiers making up the remaining ~6%. That spread no category above a third is exactly what makes the 29% jump structurally durable rather than a one-sector spike.
Deal Sizes: Big Boxes Win
Large-format transactions above 100,000 square feet dominated, accounting for roughly 50-59% of total absorption proof that national-scale manufacturers and integrated supply-chain operators, who need contiguous, high-specification Grade A space, are now driving the market. Smaller deals below 50,000 square feet kept regional distributors and SMEs active, reinforcing the market’s breadth.
City Landscape: MMR and Pune on Top
Among the top five of the eight primary markets, Mumbai MMR led with around 16.5 MSF of estimated absorption, followed closely by Pune at ~15.2 MSF, Hyderabad at ~10.5, NCR at ~9.8 and Bengaluru at ~7.6 together roughly 60 MSF, with Chennai, Ahmedabad and the remaining market accounting for the balance of the 72.5 MSF national total. Mumbai and NCR hold their lead on port proximity and highway connectivity; Pune and Hyderabad gained share on manufacturing and e-commerce; and Chennai and Ahmedabad rode industrial-corridor development and export demand.
The Sleeper Story: Cold Chain
The most overlooked shift may be cold chain – flagged as India’s fastest-growing warehousing sub-segment heading into 2026. As quick-commerce pushes fresh and frozen goods to the doorstep, pharma supply chains demand temperature integrity, and food-security pressures mount, temperature-controlled space is moving from niche to necessity. It’s the segment most likely to matter to ordinary consumers – and the one investors are only beginning to price in.
Flight to Quality: Vacancy at a Record Low
The occupiers chased the best boxes and left the rest. Grade A warehousing took the majority of volume, and national Grade A vacancy tightened to roughly 7% down from around 10% in 2023 driving rental growth of about 4% a year in key corridors. Grade B and C stock, still absorbed by cost-sensitive SMEs, faces mounting obsolescence pressure as large occupiers target Grade A almost exclusively.
2026: Already Running Hotter
The tailwinds have carried into 2026. PropTech Pulse projects around 80 million square feet of absorption at the current trajectory, with Grade A vacancy tightening further. Dedicated freight corridors and new industrial parks are opening demand in Tier II and III markets the next frontier for Grade A logistics.
The Investor Takeaway
India’s warehousing sector has moved from cyclical recovery to structural expansion, and premium, well-located assets now command both occupancy and pricing power. The tolerated asset class has become one to chase.
