Savills India Report on India’s Industrial & Logistics Sector
India’s Industrial & Logistics Sector Charges Into 2026 with Record-Breaking Q1 Performance
BENGALURU – India’s industrial and logistics real estate sector has kicked off 2026 on a high note, demonstrating resilient growth and a shifting appetite toward high-quality, compliant spaces. According to the latest Market in Minutes report by Savills India, the sector recorded a 15.6% year-on-year (Y-o-Y) increase in absorption, reaching 18.5 million sq. ft. in the first quarter alone.
Tier-I Cities Lead the Charge, Pune Takes the CrownThe nation’s primary hubs continue to dominate the landscape, accounting for 79% of total absorption. Pune has emerged as the frontrunner, contributing a massive 24% to the overall absorption, largely fueled by its expanding manufacturing footprint. Delhi-NCR and Mumbai followed closely, representing 19% and 12% of the market activity, respectively.
While Tier-I cities remain the engines of growth, Tier-II and III cities are rapidly emerging as key centers, contributing 21% to absorption. This shift is being driven by improved infrastructure, lower operating costs, and rising local consumption.
Supply Surge Reflects Market Optimism
The supply side has mirrored this robust demand, with 22.1 million sq. ft. delivered in Q1 2026—a staggering 39.0% Y-o-Y growth.
Tier-I cities saw a 50% jump in new supply, adding 18.6 million sq. ft..
Delhi-NCR led the supply pipeline with a 20% contribution, followed by Pune (18%) and Chennai (17%).
Key Statistics: Q1 2026 vs. Q1 2025
| Metric | Q1 2026 | Q1 2025 | Y-o-Y Change |
| Overall Absorption | 18.5 mn sq. ft. | 16.0 mn sq. ft. | +15.6% |
| Overall Supply | 22.1 mn sq. ft. | 15.9 mn sq. ft. | +39.0% |
| Grade-A Absorption | 60% | 51% | +9.0 pts |
Manufacturing and 3PL Drive the Engine
Manufacturing remains the single largest driver of demand, accounting for 35% of total absorption (6.5 million sq. ft.), up from 30% the previous year. This is closely followed by the Third-Party Logistics (3PL) segment at 23%, and a resurgent FMCG & FMCD sector at 14%. Notably, e-commerce is regaining traction, now making up 11% of the market
The Flight to Quality: Grade-A Demand Surges
A significant trend highlighted in the report is the “flight to quality”. Occupiers are increasingly prioritizing ESG standards and operational compliance, leading to Grade-A spaces accounting for 60% of total absorption, compared to 51% in Q1 2025.
Outlook: A “Breakout Year” for 2026
Experts at Savills India predict that 2026 will be a breakout year for the sector, with total annual absorption likely to surpass 75 million sq. ft..
“India’s industrial and logistics sector continues to witness strong momentum, driven largely by manufacturing-led demand and supportive policy initiatives,” the report states.
As supply chains move toward greater resilience and localization, emerging sectors such as Semiconductors, EVs, and Life Sciences are expected to further fuel the demand for sophisticated industrial ecosystems across more than 45 cities nationwide.
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