India’s manufacturing sector is reshaping the industrial real estate market as leasing activity and space requirements continue to expand across major urban centres. Manufacturing leasing reached 22.1 million square feet in 2024 and is projected to rise to approximately 33.7 million square feet by 2027 in the top eight cities, according to a report by JLL titled “From Make in India to Made by India: Advanced Manufacturing Real Estate Lifecycle.” The growing demand reflects a structural shift in how manufacturers plan capacity, allocate capital, and select real estate.
JLL noted that Grade A property absorption has increased steadily, rising from 70 percent in 2019 to 82 percent in 2024, and further to 87 percent through the third quarter of 2025. This trend is driven by higher technical specifications required in automotive and ancillaries, electronics and white goods, and engineering sectors. The report highlights that enhanced building standards, stronger hygiene norms, sustainable features, and compliance requirements differentiate manufacturing facilities from traditional logistics spaces.
As of the third quarter of 2025, Pune and Chennai accounted for about 75 percent of total manufacturing leasing across the eight Tier I cities, underscoring their roles as primary manufacturing hubs. Bengaluru, Mumbai, and the National Capital Region also recorded growth in leasing momentum as companies expanded within established clusters.
“The seven-fold increase in manufacturing leasing activity between 2020 to 2024 indicates a growing shift of manufacturers’ real-estate strategy and decision-making in choosing leased land and 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.
Manufacturing firms are increasingly adopting lease-first strategies to optimise capital deployment. Ready-built and built-to-suit leased facilities are serving as capex-light solutions, with ready-built spaces gaining market share on account of reduced move-in timelines. From 2019 through the third quarter of 2025, more than 76 percent of ready-built facility demand was concentrated in Pune, Chennai, and the National Capital Region.
Rental values for Grade A light manufacturing spaces in the eight major cities have appreciated over the past five years, with annual growth projected at four to six percent. Manufacturing facilities continue to command premiums over standard Grade A warehouses due to more demanding specification and compliance requirements.
Manufacturing space demand is forecast to reach roughly 34 million square feet by 2027, representing 46 percent of India’s total industrial and warehousing absorption. Growth across electric mobility, renewable energy, semiconductors, medical devices, precision tools, aerospace and defence, cellular and related electronics components, and heavy equipment is expected to support India’s objective of increasing manufacturing’s contribution to gross domestic product to 25 percent.
The shift toward Grade A leased facilities signals continued expansion in manufacturing real estate, supported by both domestic capital investment and international interest.
