Dec 03: India’s manufacturing sector is fundamentally reshaping the industrial real estate landscape through phenomenal leasing activity and evolving space requirements. Manufacturing leasing activity has demonstrated exceptional growth, reaching 22.1 million sq. ft in 2024, with projections indicating continued expansion to approximately 33.7 million sq. ft by 2027 in top 8 cities—representing nearly half of India’s total industrial and warehousing absorption, according to JLL Report titled “From Make in India to Made by India: Advanced Manufacturing Real Estate Lifecycle” released today.
Grade A property demand has experienced substantial growth, rising from 70% in 2019 to 82% in 2024 and reaching 87% through Q3 2025 in top 8 cities. This upward trajectory reflects increasing requirements for customised high-end specifications, particularly driven by the Auto & Ancillaries, Electronics & White Goods, and Engineering sectors. The demand surge is characterized by enhanced building specifications, stricter hygiene standards, demand for sustainable/ green building and comprehensive safety compliance requirements that distinguish modern manufacturing facilities from traditional logistics operations.
As of Q3 2025, Pune and Chennai emerged as the dominant markets among India’s eight Tier I cities for manufacturing leasing activity, collectively accounting for ~75% of total demand for manufacturing leasing spaces. Other cities like Bengaluru, Mumbai, and NCR are also experiencing rapid growth, further accelerating the overall leasing momentum.
Source: JLL Market Research
“The seven-fold increase in manufacturing leasing activity between 2020 to 2024 indicates a growing shift of manufacturer’s real-estate strategy & decision-making in choosing leased land & building. Grade A facilities are preferred by most manufacturers, given its ability to handle automation, better infrastructure and sustainable ecosystem.” said Yogesh Shevade, Head of Industrial and Logistics, India, JLL.
Capital efficiency transformation
Manufacturing companies are increasingly adopting lease-first strategies to optimize capital allocation. Ready-built and built-to-suit leased facilities provide “capex-light” solutions, enabling manufacturers to redirect financial resources toward core competencies while accessing fully functional, well-equipped facilities. Ready-built facilities are gaining market share due to accelerated move-in timelines, with over 76% of ready-built facility requirements concentrated in Pune, Chennai, and NCR markets from 2019 through Q3 2025.
Rental market appreciation: Grade A light manufacturing space rents across eight major cities have experienced consistent growth over the past five years, with projected annual appreciation of 4-6% driven by increasing demand and investment pipeline from engineering, auto & ancillaries, and electronics sectors.
Premium positioning: Manufacturing space rental rates demonstrate notable premiums over standard Grade A warehouse facilities due to stringent building specifications and compliance requirements, reflecting the sector’s sophisticated operational needs.
Manufacturing space demand is forecasted to reach ~34 million sq. ft by 2027, representing 46% of India’s total industrial and warehousing absorption—a clear indication of the sector’s dominant market position.
Role of Advanced Manufacturing Sectors in India’s Manufacturing Growth
India is intensifying its strategic focus on eight advanced manufacturing sectors—electric mobility, renewable energy, semiconductors, medical devices, precision tools, aerospace & defense, cellular and related electronics component, and heavy equipment. Driven by robust government initiatives and targeted incentives, this push aims to achieve 25% manufacturing contribution to GDP, supporting India’s journey toward Viksit Bharat (Developed Nation) by 2047.
Looking Ahead
The manufacturing sector’s transformation of India’s industrial & logistics real estate market reflects broader economic trends toward advanced manufacturing capabilities, quality enhancement, and operational efficiency. Companies entering or expanding within India’s manufacturing landscape should prioritize Grade A facilities in established clusters, while leveraging lease structures to optimize capital deployment and operational flexibility.
This market evolution positions India’s manufacturing real estate sector for continued growth, supported by both domestic expansion and international investment, making it a critical component of the country’s industrial development strategy.