Manufacturing Leasing Soars Seven-Fold Since 2020

Light manufacturing leasing across the top 8 Indian cities has seen explosive growth — from 3.2 million sq. ft in 2020 to 22.1 million sq. ft in 2024, marking a 62% CAGR.
Year-end 2025 absorption is expected to reach 25.4 million sq. ft, up 15% from 2024.

By 2027, manufacturing alone is estimated to account for 46% of India’s total industrial and warehousing absorption, underscoring the sector’s dominance.

Shift to Grade A Facilities Driven by Modern Manufacturing Needs

Grade A properties are emerging as the clear preference for manufacturers.
Share of Grade A leasing grew from:

• 70% in 2019
• 82% in 2024
• 87% by Q3 2025

Demand is fuelled by sectors requiring specialized specifications — Auto & Ancillaries, Electronics, White Goods, Engineering — where high-end infrastructure, sustainability standards, safety norms and automation-ready layouts are essential.

Pune & Chennai Lead India’s Manufacturing Leasing

As of Q3 2025, Pune and Chennai together account for nearly 75% of all manufacturing leasing in Tier I cities.
Other markets like Bengaluru, NCR, and Mumbai are also witnessing accelerating growth, contributing to nationwide momentum.

Companies Prefer Leasing Over Buying to Preserve Capital

Manufacturers are increasingly shifting to “lease-first” models to avoid heavy upfront investment.
Built-to-suit and ready-built manufacturing facilities offer:

• Faster occupancy timelines
• Reduced capital expenditure
• Access to high-compliance, fully equipped spaces

From 2019–Q3 2025, 76% of ready-built facility demand was concentrated in Pune, Chennai and NCR.

Rising Rentals Reflect High Specification Demand

Rental values for Grade A light manufacturing spaces in the top 8 cities have risen consistently.
Projections show 4%-6% annual rental appreciation, driven by strong demand from engineering, electronics, and automotive sectors.

Manufacturing rentals now command significant premiums over standard Grade A warehousing due to stringent specification and compliance requirements.

Advanced Manufacturing Sectors Will Drive the Next Wave

JLL identifies eight high-potential sectors powering India’s manufacturing ascent:

• Electric mobility
• Renewable energy
• Semiconductors
• Medical devices
• Precision tools
• Aerospace & defence
• Electronics components
• Heavy equipment

These sectors align with India’s goal of raising manufacturing’s share of GDP to 25%, supporting the nation’s push toward Viksit Bharat 2047.

Outlook: India on Track to Become a Global Manufacturing Hub

The manufacturing sector’s strong leasing trajectory, growing preference for Grade A developments, and capital-efficient leasing strategies point to long-term structural growth.
Companies expanding within India’s manufacturing ecosystem are advised to prioritise Grade A clusters with robust infrastructure and flexible leasing models.

With rising domestic capacity and global investors increasing exposure, India’s manufacturing real estate is positioned for sustained expansion.

Also Read: Indian manufacturing market has the potential to reach US$ 1 trillion by 2025-26

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