South Drives Growth, Telugu States Picks Up Pace in Warehousing Demand

An independent Q1 assessment from Colliers points to accelerating activity in both Hyderabad and Bengaluru. Visakhapatnam is also drawing attention as a potential secondary industrial and logistics market.

India’s industrial and warehousing market continued to expand in the first quarter of 2026, with Bengaluru and Chennai accounting for a combined quarter of leasing activity and Hyderabad showing stronger demand in a separate industry survey, while Andhra Pradesh is building out industrial corridors and logistics infrastructure that could support the next phase of southern India’s manufacturing growth.

Total industrial and warehousing stock across India’s eight major Tier-I markets reached 514 million square feet at the end of March 2026, according to JLL data released in June. Gross absorption during the January-March quarter stood at 18.3 million square feet, up about 13% from a year earlier.

For southern India, Bengaluru accounted for 13% of JLL’s Q1 absorption and Chennai for 12%. Based on the 18.3-million-square-foot national total, those shares translate to approximately 2.4 million square feet in Bengaluru and 2.2 million square feet in Chennai during the quarter.

Chennai was particularly significant on the manufacturing side. JLL said Pune and Chennai recorded the highest shares of manufacturing demand among the major markets, reflecting the strength of established automotive, engineering and production ecosystems.

Manufacturing accounted for 28% of total industrial and warehousing absorption nationally, or about 5.1 million square feet, during Q1. Engineering companies represented 47% of manufacturing transactions, while automobile and ancillary businesses accounted for another 32%.

The larger share of demand still came from warehousing. About 13.2 million square feet, or 72% of quarterly absorption, was attributed to warehousing users, led by third-party logistics companies and followed by e-commerce, consumer goods, consumer durables and retail businesses.

Hyderabad, Bengaluru show stronger year-on-year momentum

An independent Q1 assessment from Colliers points to accelerating activity in both Hyderabad and Bengaluru. Colliers said Grade A industrial and warehousing uptake in the two cities grew to two to three times their Q1 2025 levels. It also identified the Hoskote-Narsapura corridor near Bengaluru as India’s most active industrial and warehousing micro-market during the quarter, with about 1.4 million square feet of leasing.

The Colliers figures are based on a Grade A-focused market series and therefore should not be directly compared with JLL’s broader 18.3-million-square-foot gross-absorption figure. Still, both datasets point to sustained demand across the major southern manufacturing and distribution centres.

Karnataka has also moved to strengthen the sector through policy measures. Its Industrial Policy 2025-30 treats logistics and warehousing as an industry, providing access to industrial power tariffs and establishing development provisions intended to make warehouse projects easier to build. The state’s investment agency says Karnataka has more than 1,600 warehousing facilities and is linked to the Chennai-Bengaluru Industrial Corridor.

 Andhra Pradesh positioned between major southern corridors

Andhra Pradesh is not one of the eight Tier-I city markets covered in the headline JLL Q1 figures, but its industrial strategy places the state directly within the expanding southern logistics network.

The Andhra Pradesh government’s Industrial Development Policy 2024-29 identifies three national industrial corridors passing through the state: the Visakhapatnam-Chennai Industrial Corridor, Chennai-Bengaluru Industrial Corridor and Hyderabad-Bengaluru Industrial Corridor. The policy calls for integrated logistics infrastructure and multimodal transport links to support manufacturing along those corridors.

Major development nodes include Krishnapatnam in the Nellore region, Kopparthy in YSR Kadapa district and Orvakal in Kurnool district, according to the Andhra Pradesh Industrial Corridors Infrastructure Development Corporation.

Visakhapatnam is also drawing attention as a potential secondary industrial and logistics market. Colliers, in a May 2026 assessment of India’s major warehousing clusters, named Visakhapatnam among emerging Tier-II locations expected to see stronger industrial and warehousing activity, alongside markets such as Coimbatore, Indore and Jaipur.

That could make Andhra Pradesh an increasingly important link between Chennai’s manufacturing base, Bengaluru’s industrial and consumption market, Hyderabad’s logistics demand and the state’s own port-linked industrial centres.

Grade A space takes bigger share

The shift toward higher-quality facilities is another major feature of the market. JLL said Grade A industrial and warehouse stock reached 293 million square feet in Q1 2026, about 20% higher than a year earlier and equivalent to 57% of the stock in the eight major markets.

JLL expects occupiers to increasingly consider built-to-suit projects, lease-to-buy arrangements and other flexible real-estate structures as land and construction costs rise.

The firm projects the industrial and warehousing market to reach approximately 850 million square feet by 2030, supported by manufacturing investment, production-linked incentive programs, e-commerce expansion and efforts by global companies to diversify supply chains.

For Telugu Americans with business, investment or professional connections to southern India, the trend is notable because the emerging logistics network increasingly links Hyderabad and Andhra Pradesh with Bengaluru and Chennai, rather than functioning as isolated metropolitan markets. Continued investment in ports, industrial corridors, manufacturing clusters and modern warehouses could strengthen those connections further as companies reorganize Indian and global supply chains.