Western India remained the key growth engine during Q2 2026, with Mumbai and Pune accounting for 65% of the pan-India absorption, up from 33% a year earlier. Mumbai emerged as the largest contributor, driven by robust leasing activity in Bhiwandi, which accounted for nearly 69% of the city’s absorption. Although Pune remained the second-largest market, its share moderated to 17% from 39% in the previous quarter following strong leasing activity in Q1. Meanwhile, NCR, Bengaluru, Chennai, and Kolkata also registered healthy demand, reflecting broad-based occupier activity across major markets.

Occupier demand was mainly concentrated among core industry segments during Q2 2026. Third-party logistics (3PL) companies led leasing activity with 41% share, followed by Consumer Goods & Services (12%) and Engineering & Manufacturing (11%). Together, these sectors accounted for nearly two-thirds (64%) of the total absorption, while Energy, Automobiles & Auto Components, and Chemicals & Petrochemicals collectively contributed another 22%.

Robust demand continued to support long-term investor interest in the sector. However, amid global uncertainty, institutional investors remained selective, with investments totalling USD 27 Mn in Q2 2026, accounting for just 1% of the total quarterly real estate investments. While investment volumes increased by 25% over the previous quarter, they remained below the level recorded a year earlier.City-wise Absorption

Source: Vestian Research

·       Mumbai led with 5.0 Mn sq ft of absorption, registering 6% quarterly and 459% annual growth. The city has maintained a steady upward trajectory over the past four quarters, supported by sustained leasing activity in  Bhiwandi micro-market. Pune ranked second with 1.8 Mn sq ft; however, absorption declined by 60% from the previous quarter after several large transactions concluded in Q1 2026.

·       NCR recorded 1.2 Mn sq ft of absorption, increasing by 70% quarter-on-quarter and 75% year-on-year. Bengaluru also witnessed a strong recovery, with leasing rising to 1.0 Mn sq ft—the highest since Q2 2025—following a subdued previous quarter.

·       Chennai continued its positive momentum, with absorption rising 17% sequentially and 52% annually to 0.7 Mn sq ft. Hyderabad, in contrast, recorded 0.5 Mn sq ft, declining 34% over the previous quarter while remaining broadly stable year-on-year.

·       Kolkata rebounded strongly during the quarter, with absorption increasing to 0.4 Mn sq ft from a negligible level in Q1 2026 and registering 212% annual growth.

The sector is expected to benefit from the government’s continued emphasis on infrastructure-led growth, reinforced by the Union Budget 2026–27. Higher capital expenditure, alongside ongoing investments in multimodal connectivity, freight corridors, logistics parks, and cold-chain infrastructure, is anticipated to improve supply chain efficiency and support the expansion of modern warehousing facilities. These structural developments are expected to create new growth opportunities for both occupiers and investors.

Shrinivas Rao, FRICS, CEO, Vestian, said, “India’s warehousing sector is undergoing a structural transformation, evolving beyond traditional priorities such as supply chain optimization, operational efficiency, and proximity to demand centres. Sustainability has emerged as a key differentiator, with occupiers increasingly seeking Grade-A green warehouses that align with their ESG commitments and long-term business objectives. Backed by supportive government policies and sustained infrastructure development, this transition is expected to accelerate further, reinforcing the sector’s appeal to both global occupiers and long-term institutional investors.”

Going forward, demand from 3PL, Engineering & Manufacturing, and Consumer Goods & Services is expected to remain the primary driver of leasing activity. Continued investments in multimodal infrastructure, technology-enabled warehousing, and supply chain modernization are likely to sustain occupier demand while gradually strengthening institutional investor confidence in the sector.

GCCs Catalyse Green and Grade-A Adoption in Flex Spaces

As GCCs are becoming the major occupiers of flex spaces, they are driving sustainability and quality grade-A office leases in the flex segment. Across the top seven cities, 42% of flex centres are green-certified, and 69% are located in premium grade-A buildings. In comparison, 62% of GCC bases operating within flex spaces are located in green-certified centers, while an even higher 85% function from grade-A buildings.

City-wise Distribution of Grade-A and Green-Certified Centers

Source: Vestian Research

GCCs’ Location Preferences Driving Flex Expansion Beyond Core Markets

Peripheral Business Districts (PBD) have emerged as preferred locations for GCC expansion compared to central city areas. These zones offer strong connectivity, competitive pricing, better scalability, and larger office campuses—factors that appeal to rapidly growing global enterprises. Reflecting this shift, 77% of the flex area occupied by GCC bases is located in peripheral regions, compared with 61% of the overall flex stock.

Shrinivas Rao, FRICS, CEO, Vestian said, “As India’s GCC landscape continues to evolve, flex operators will remain indispensable partners—offering flexibility, faster speed to market, and enterprise-grade infrastructure that global companies require, to scale efficiently in a highly competitive market.”

India’s Flex Market Scales Rapidly on GCC Demand

Driven by strong demand from GCCs, India’s flex ecosystem has expanded to 82.3 Mn sq ft spread across nearly 1,400 centres in the top seven cities. However, the market continues to remain consolidated, with the top 10 operators controlling 67% of the total stock. Bengaluru leads with 33.2% share of the country’s flex stock, followed by NCR at 20.4% and Pune at 14.7%.

City-wise Distribution of Flex Stock

Source: Vestian Research

Rao further added, “India’s flex stock is projected to exceed 100 Mn sq ft across Tier-1 cities by 2026 as flex operators expand and upgrade their portfolios to effectively accommodate the growing demand from Global Capability Centers .”

Underpinned by resilient economic fundamentals, stable policy frameworks, and anticipated GDP growth of over 7% in FY 2026, India is well-positioned to cement its role as a leading global hub for GCCs. As these centers continue prioritizing the need for agility, sustainability, and regulatory compliance, flex operators have an opportunity to align their offerings with the next generation’s workspace expectations.