3PL firms drive one-third of industrial & warehousing demand in Q1 2026; New supply across top 8 cities at 12.5 mn sq ft: Colliers

• Delhi NCR and Chennai remain key demand centers, contributing around half of the quarterly leasing
• Grade A space uptake grows 22% YoY to 11 million sq ft across top 8 cities in Q1 2026
• 3PL firms led demand in Q1 2026 with 1.8X times leasing compared to Q1 2025 levels
• New supply recorded at 12.5 million sq ft in Q1 2026, an impressive 33% YoY rise
• Ongoing global supply chain disruptions may moderate growth momentum in near term; long term drivers however remain intact

15 April 2026: With 11 million sq ft of leasing in Q1 2026, industrial & warehousing demand across the top eight cities remained strong, witnessing a 22% YoY growth. Delhi NCR continued to drive demand during the quarter, with 28% share, followed by Chennai with 21% share. Interestingly, leasing in Hyderabad and Bengaluru also remained robust, with Grade A industrial & warehousing space uptake in Q1 2026, growing at 2-3X times compared to the same period of last year. At a micro market level, Hoskote-Narsapura in Bengaluru was the most active market for Q1 2026 with 1.4 million sq ft of leasing. Bhiwandi followed closely, registering approximately 1.1 million sq ft of leasing during the quarter.

Third Party Logistics (3PL) players drove overall demand during the quarter, forming around one-third of the space uptake. In fact, demand from 3PL during Q1 2026 was 1.8X times compared to the leasing activity of Q1 2025. This traction was aided by expanding logistics requirements and supply chain modernization. Additionally, E-commerce and Automobile segments also recorded strong leasing in Q1 2026.

Trends in Grade A Gross absorption (million sq ft)

Source: Colliers

Note: Data pertains to Grade A buildings. Absorption does not include lease renewals, pre-commitments and deals where only a Letter of Intent has been signed.

“Leasing activity in the first quarter of 2026 remained strong at 11 million sq ft, marking a 22% annual increase and underscores sustained demand for Grade A space. Demand from 3PL, E‑commerce and Automobile players remained firm during Q1 2026, as occupier diversification continued to gain momentum. Although long‑term fundamentals of India’s industrial & warehousing market remain intact, developers are likely to adopt a measured approach with respect to supply additions in the near term amid prevailing geopolitical crisis and supply chain disruptions. Nevertheless, continued policy support to enhance domestic manufacturing and logistics capabilities will remain pivotal in navigating potential downside risks.” says Vijay Ganesh, Managing Director, Industrial & Logistics Services, Colliers India.

Space uptake by 3PL players remains strong accounting for one-third of overall demand

With about 3.5 million sq ft of leasing, 3PL players continued to dominate leasing during Q1 2026 accounting for about one-third of Grade A demand across the top eight cities of the country. Space uptake by the segment was 1.8x times compared to Q1 2025 levels and was driven by network expansion, increased logistics outsourcing, and continued improvements in multi-modal connectivity.

Demand from E-commerce and Automobile players also remained firm and cumulatively accounted for about 32% of the leasing during the quarter. Both these segments saw over 1.5 million sq ft leasing during the quarter. Amidst continued diversification, FMCG and Electronics firms also saw over 2X leasing during the quarter, on an annual basis.

“3PL, E‑commerce and Automobile players together accounted for around two-thirds of the leasing activity during the quarter. Looking ahead, 3PL firms are expected to remain the dominant demand driver, supported by supply‑chain modernization. Simultaneously, E‑commerce demand will continue to gain traction supported by growing online consumption, faster delivery expectations, and expanding distribution footprints. However, the prolonged West Asia crisis remains a key monitorable factor, with potential implications for the Indian economy and the industrial and warehousing sector over the next few quarters.” says Vimal Nadar, National Director & Head, Research, Colliers India.

Large sized deals account for about 48% of the industrial & warehousing space demand

During the quarter, large deals (>200,000 sq ft) accounted for 48% of the demand at 5.3 million sq ft. Amongst these larger deals, E-commerce companies accounted for 34% of leasing. Large deals were also driven by 3PL and Automobile players significantly during the quarter with about 20-30% share each.

Top Deals for Q1 2026

Note: Data pertains to Grade A buildings of the top 8 cities, including Ahmedabad, Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai and Pune

Source: Colliers

Amidst strong completions, vacancy levels rose to 16.7%

During Q1 2026, the top eight cities saw 12.5 million sq ft of new supply, corresponding to a 33% YoY rise. At the city level, Delhi NCR and Bengaluru accounted for about half of the completions during the quarter.

Trends in Grade A Supply (million sq ft)

Source: Colliers

Data pertains to Grade A buildings

With supply outpacing demand consistently in recent times, overall vacancy levels rose by about 360 bps to 16.7% at the end of Q1 2026. Meanwhile, average rentals remained largely stable across most major cities, with select high-activity micro markets witnessing a significant annual rise in rentals.