Manufacturing Boom Drives Surge in Industrial Real Estate Demand

04 Dec 2025 CW Team

Demand for Grade A facilities has grown consistently, increasing from 70 per cent in 2019 to 82 per cent in 2024 and further to 87 per cent through Q3 2025. The shift reflects rising requirements for customised, high-specification buildings driven by the Auto and Ancillaries, Electronics and White Goods, and Engineering sectors. Modern facilities now emphasise stringent hygiene norms, green building features and comprehensive safety compliance—characteristics that set them apart from traditional logistics spaces.

As of Q3 2025, Pune and Chennai accounted for nearly 75 per cent of manufacturing leasing demand in Tier I cities, with Bengaluru, Mumbai and NCR also witnessing rapid growth. Yogesh Shevade, Head of Industrial and Logistics, India, JLL, said the seven-fold rise in leasing between 2020 and 2024 reflects manufacturers’ preference for leased Grade A facilities that support automation, stronger infrastructure and sustainable operations.

Manufacturers are also adopting lease-first strategies to improve capital efficiency. Ready-built and built-to-suit leased facilities offer capex-light options, enabling companies to focus on core operations while gaining access to fully equipped sites. From 2019 to Q3 2025, over 76 per cent of ready-built facility demand was concentrated in Pune, Chennai and NCR due to faster move-in timelines.

Grade A light manufacturing rentals across major cities have recorded steady appreciation over the past five years, with expected annual growth of 4–6 per cent driven by rising demand from engineering, auto and electronics sectors. Rental premiums remain strong compared to standard warehouse spaces due to the higher specifications and compliance requirements of manufacturing facilities.

Manufacturing space demand is expected to reach nearly 34 million sq ft by 2027, representing 46 per cent of India’s total industrial and warehousing absorption and reinforcing the sector’s strengthening market dominance.

India’s manufacturing sector is reshaping the industrial real estate market with strong leasing momentum and evolving facility requirements. Manufacturing leasing activity reached 22.1 million sq ft in 2024 and is projected to rise to around 33.7 million sq ft by 2027 across the top eight cities, accounting for nearly half of the country’s total industrial and warehousing absorption, according to JLL’s report ‘From Make in India to Made by India: Advanced Manufacturing Real Estate Lifecycle’.Demand for Grade A facilities has grown consistently, increasing from 70 per cent in 2019 to 82 per cent in 2024 and further to 87 per cent through Q3 2025. The shift reflects rising requirements for customised, high-specification buildings driven by the Auto and Ancillaries, Electronics and White Goods, and Engineering sectors. Modern facilities now emphasise stringent hygiene norms, green building features and comprehensive safety compliance—characteristics that set them apart from traditional logistics spaces.As of Q3 2025, Pune and Chennai accounted for nearly 75 per cent of manufacturing leasing demand in Tier I cities, with Bengaluru, Mumbai and NCR also witnessing rapid growth. Yogesh Shevade, Head of Industrial and Logistics, India, JLL, said the seven-fold rise in leasing between 2020 and 2024 reflects manufacturers’ preference for leased Grade A facilities that support automation, stronger infrastructure and sustainable operations.Manufacturers are also adopting lease-first strategies to improve capital efficiency. Ready-built and built-to-suit leased facilities offer capex-light options, enabling companies to focus on core operations while gaining access to fully equipped sites. From 2019 to Q3 2025, over 76 per cent of ready-built facility demand was concentrated in Pune, Chennai and NCR due to faster move-in timelines.Grade A light manufacturing rentals across major cities have recorded steady appreciation over the past five years, with expected annual growth of 4–6 per cent driven by rising demand from engineering, auto and electronics sectors. Rental premiums remain strong compared to standard warehouse spaces due to the higher specifications and compliance requirements of manufacturing facilities.Manufacturing space demand is expected to reach nearly 34 million sq ft by 2027, representing 46 per cent of India’s total industrial and warehousing absorption and reinforcing the sector’s strengthening market dominance.

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