Oct 09: India’s industrial and logistics sector continued its growth trajectory, witnessing 24.3 mn sq. ft. of absorption in Q3 2026, with a YoY growth of 14.1%. Tier-I cities continued to dominate absorption, accounting for 19.9 mn sq. ft. and an 82% share of the total absorption, while Tier-II and III cities contributed 4.4 mn sq. ft. Cumulative absorption during the first nine months of 2026 reached 59.1 mn sq. ft., up 6.9% YoY, according to international real estate advisory firm Savills India.
On the supply front, fresh completions totaling 26.2 mn sq. ft. were added in Q3 2026, representing a 21.3% YoY growth, highlighting the robust supply pipeline and continued market expansion.
Q3 2026 vs Q3 2025: Absorption across Tiers
|
Q3 26 Absorption (Mn sq. ft) |
Q3 25 Absorption (Mn sq. ft) |
Y-o-Y change (%) |
YTD 9M 26 Absorption (Mn sq. ft) |
YTD 9M 25 Absorption (Mn sq. ft) |
YTD Y-o-Y change (%) |
|
|
Overall |
24.3 |
21.3 |
14.1% |
59.1 |
55.3 |
6.9% |
|
Tier I |
19.9 |
17.8 |
11.8% |
47.2 |
44.0 |
7.3% |
|
Tier II & III |
4.4 |
3.5 |
25.7% |
11.9 |
11.3 |
5.3% |
Q3 2026 vs Q3 2025: Supply across Tiers
|
Q3 26 Supply (Mn sq. ft) |
Q3 25 Supply (Mn sq. ft) |
Y-o-Y change (%) |
YTD 9M 26 Supply (Mn sq. ft) |
YTD 9M 25 Supply (Mn sq. ft) |
YTD Y-o-Y change (%) |
|
|
Overall |
26.2 |
21.6 |
21.3% |
68.9 |
55.0 |
25.3% |
|
Tier I |
19.2 |
17.5 |
9.7% |
55.9 |
44.8 |
24.8% |
|
Tier II & III |
6.9 |
4.0 |
72.5% |
12.9 |
10.2 |
26.5% |
Tier-I cities contributed the bulk of the supply with 19.2 mn sq. ft. (73% share), while Tier-II and III markets added 6.9 mn sq. ft. (27%).
Q3 2026 vs Q3 2025 Grade Wise Supply & Absorption (%)
|
Q3 26 |
Q3 25 |
|||
|
Grade A |
Grade B |
Grade A |
Grade B |
|
|
Supply |
58% |
42% |
50% |
50% |
|
Absorption |
66% |
34% |
52% |
48% |
Source: Savills India Research
The growing emphasis on quality infrastructure, compliance requirements, and ESG considerations has significantly boosted demand for Grade-A space in recent years. As a result, Grade-A absorption rose to 66% in Q3 2026, up from 52% in Q3 2025.
Q3 2026 vs Q3 2025: Overall Sector wise Absorption (%)
|
Sector |
Q3 26 |
Q3 25 |
|
3PL |
26% |
34% |
|
E-Commerce |
10% |
10% |
|
Manufacturing |
31% |
27% |
|
Retail |
12% |
5% |
|
FMCG/FMCD |
9% |
9% |
|
Others |
12% |
15% |
Driven by sustained expansion, the manufacturing segment strengthened its contribution to total absorption, reaching 31% in Q3 2026 compared to 27% in Q3 2025. The 3PL segment maintained strong momentum, contributing 26% of total absorption in Q3 2026, while the retail segment strengthened its presence, increasing its share from 5% in Q3 2025 to 12% in Q3 2026.
Q3 2026 vs Q3 2025: City wise Supply and Absorption (%)
|
Supply (%) |
Absorption (%) |
|||
|
Q3 26 |
Q3 25 |
Q3 26 |
Q3 25 |
|
|
Ahmedabad |
1% |
1% |
2% |
4% |
|
Bengaluru |
11% |
14% |
16% |
11% |
|
Chennai |
10% |
11% |
12% |
5% |
|
Delhi-NCR |
15% |
15% |
20% |
21% |
|
Hyderabad |
1% |
2% |
3% |
6% |
|
Kolkata |
2% |
5% |
2% |
7% |
|
Mumbai |
15% |
18% |
14% |
15% |
|
Pune |
18% |
15% |
13% |
15% |
|
Tier II & III Cities |
27% |
19% |
18% |
16% |
Delhi-NCR remained as the leading market, accounting for 20% of total absorption in Q3 2026, followed by Bengaluru at 16%, Mumbai and Pune at 14% and 13% respectively. The Tier-II & III cities together accounted for 18% of the total absorption. In terms of supply, Pune emerged as the highest contributor, accounting for 18% in Q3 2026, followed by Delhi-NCR and Mumbai each at 15%, while the Tier-II & III cities together accounted for 27% of the total supply.
India’s industrial and logistics sector is expected to witness steady growth in 2026, supported by manufacturing expansion and sustained demand from 3PL, FMCG/FMCD, retail, and e-commerce occupiers. Rising consumption, supply chain realignment, and growing activity in Tier-II and III cities will continue to drive demand. Rental values for Grade-A assets are likely to see a mild uptick, while stable yields and strong investor interest are expected to reinforce the sector’s attractiveness as a resilient and scalable asset class
