India's warehousing sector achieved a historic milestone in 2025, with vacancy rates falling to record lows as absorption surged. According to the India Real Estate Report 2026 by PropTech Pulse, total transacted volume jumped 29% year-on-year to 72.5 million square feet (6.74 million square metres) across eight primary markets. The fourth quarter alone saw a record 23.4 million square feet absorbed, nearly 38.5% above the average of the first three quarters, capping the strongest year ever for the sector.
Acceleration Through the Year
Absorption climbed steadily each quarter: 15.8 million square feet (MSF) in Q1, 16.4 MSF in Q2, 16.9 MSF in Q3, and a breakout 23.4 MSF in Q4. Year-end corporate space decisions, manufacturing commitments under Production Linked Incentive (PLI) schemes, and a strengthening third-party logistics (3PL) network drove the surge. The market ended the year accelerating rather than coasting, signalling strong occupier confidence.
Broad-Based Demand Drivers
No single sector dominated. Manufacturing and industrial firms accounted for roughly 32% of transacted volume, powered by PLI schemes, export-oriented production, and supply-chain localization. 3PL operators followed at 28%, driven by 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. FMCG and retail contributed 14%, while cold-chain, pharma, and other occupiers made up the remaining 6%. This spread, with no category above a third, makes the 29% jump structurally durable.
Large-Format Deals Dominate
Large-format transactions above 100,000 square feet dominated, accounting for roughly 50-59% of total absorption. National-scale manufacturers and integrated supply-chain operators, needing contiguous, high-specification Grade A space, drove this trend. Smaller deals below 50,000 square feet kept regional distributors and SMEs active, reinforcing market breadth.
City Landscape: MMR and Pune Lead
Among the eight primary markets, Mumbai MMR led with around 16.5 MSF of estimated absorption, followed by Pune at 15.2 MSF, Hyderabad at 10.5 MSF, NCR at 9.8 MSF, and Bengaluru at 7.6 MSF. Together, these top five cities accounted for roughly 60 MSF, with Chennai, Ahmedabad, and the remaining market making up the balance. Mumbai and NCR benefit from port proximity and highway connectivity; Pune and Hyderabad gained share on manufacturing and e-commerce; Chennai and Ahmedabad rode industrial-corridor development and export demand.
Cold Chain: The Overlooked Shift
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 is the segment most likely to matter to ordinary consumers and one investors are only beginning to price in.
Flight to Quality Drives Vacancy to Record Low
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% per 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 Outlook: Already Running Hotter
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.
India's warehousing sector has moved from cyclical recovery to structural expansion. Premium, well-located assets now command both occupancy and pricing power. The tolerated asset class has become one to chase.
