India’s industrial real estate market is witnessing a fundamental shift, led by the rapid growth of manufacturing leasing. According to JLL’s report “From Make in India to Made by India: Advanced Manufacturing Real Estate Lifecycle”, light manufacturing absorption reached 22.1 million sq. ft in 2024, a seven-fold jump from 3.2 million sq. ft in 2020 across the top eight cities. By 2027, this figure is projected to touch approximately 34 million sq. ft, nearly 46% of total industrial and logistics absorption.
“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.
Rising Demand for Grade A Facilities
The surge in leasing activity is closely tied to the growing need for high-quality, Grade A manufacturing spaces. Demand for Grade A properties has steadily increased, from 70% in 2019 to 82% in 2024, and now stands at 87% through Q3 2025 in top eight cities. Manufacturers are increasingly seeking facilities with enhanced building specifications, stricter hygiene standards, sustainable certifications, and comprehensive safety compliance.
Sectors such as Auto & Ancillaries, Electronics & White Goods, and Engineering are leading this demand. These industries require modern infrastructure capable of supporting automation, precision manufacturing, and environmentally compliant operations—features that traditional warehouse spaces cannot accommodate.
Cities Driving the Boom
As of Q3 2025, Pune and Chennai have emerged as dominant hubs for manufacturing leasing, together accounting for nearly 75% of total absorption in the top eight cities. Other cities, including Bengaluru, Mumbai, and the National Capital Region (NCR), are also witnessing strong growth, further fueling the overall momentum.
Lease-First Strategies and Capital Efficiency
Manufacturers are increasingly adopting lease-first strategies to optimize capital allocation. Ready-built and built-to-suit leased facilities allow companies to conserve capital while accessing fully operational, high-spec buildings. Over 76% of ready-built facility requirements from 2019 through Q3 2025 are concentrated in Pune, Chennai, and NCR markets, reflecting the preference for fast, turnkey solutions.
This trend highlights the sector’s shift toward “capex-light” strategies, enabling manufacturers to redirect resources toward core competencies rather than heavy real estate investment.
Rental Growth and Premium Positioning
Grade A light manufacturing space rents across eight major cities have appreciated consistently over the past five years, with projected annual growth of 4-6%, supported by the engineering, auto & ancillaries, and electronics sectors. Premium rental rates are justified by the stringent building specifications and compliance standards that distinguish manufacturing spaces from conventional warehouse facilities.
Advanced Manufacturing Sectors Driving Growth
India is focusing on eight advanced manufacturing sectors: electric mobility, renewable energy, semiconductors, medical devices, precision tools, aerospace & defense, cellular electronics, and heavy equipment. Robust government initiatives and sector-specific incentives are fueling expansion, with the broader goal of raising manufacturing’s contribution to GDP to 25% and supporting India’s vision of becoming a developed nation by 2047.
These sectors are expected to continue driving demand for high-quality manufacturing spaces, establishing India as a hub for technologically advanced, globally competitive production.
Looking Ahead
The rapid evolution of India’s manufacturing real estate highlights a broader trend toward quality-driven, operationally efficient industrial spaces. Companies entering or expanding within India’s manufacturing landscape should prioritize Grade A facilities in established clusters while leveraging lease structures for flexibility and capital efficiency.
As manufacturing becomes the dominant force in India’s industrial real estate, domestic and international investors are taking notice. The combination of premium infrastructure, robust policy support, and sustainable practices positions India’s manufacturing sector for continued expansion, making it a cornerstone of the country’s industrial development strategy.
