India's manufacturing leasing to hit 46% of India’s industrial real estate by 2027: JLL

India's manufacturing boom is also contributing immensely to India's industrial real estate market, with leasing demand forecasted to reach 34 million sq. ft by 2027 in the top 8 cities, representing 46% of India’s total industrial and warehousing absorption, a clear indication of the sector’s dominant market position, according to a new JLL report. The latest data by the global real estate consultancy shows manufacturing leasing surged to 22.1 million sq. ft in 2024, with projections estimating continued expansion.

JLL's report titled “From Make in India to Made by India: Advanced Manufacturing Real Estate Lifecycle” shows that Grade A property demand has experienced substantial growth, rising from 70% in 2019 to 82% in 2024 and reaching 87% through Q3 2025 in the top 8 cities. This upward trajectory reflects increasing requirements for customised high-end specifications, particularly driven by the auto and ancillaries, electronics & white goods, and engineering sectors. 

The demand surge is driven 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.

“The seven-fold increase in manufacturing leasing activity between 2020 to 2024 indicates a growing shift of manufacturers’ real-estate strategy & decision-making in choosing leased land & building. Grade A facilities are preferred by most manufacturers, given their ability to handle automation, better infrastructure and a sustainable ecosystem," said Yogesh Shevade, Head of Industrial and Logistics, India, JLL. 

The report also shows that manufacturing companies are increasingly adopting lease-first strategies to optimise 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."

In the rental market, the report shows 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. "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." 

Highlighting the role of advanced manufacturing sectors in India’s manufacturing growth, the JLL report says India is intensifying its strategic focus on eight advanced manufacturing sectors—electric mobility, renewable energy, semiconductors, medical devices, precision tools, aerospace & defence, cellular and related electronics components, 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."

In its outlook for the sector, JLL says 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 prioritise Grade A facilities in established clusters, while leveraging lease structures to optimise capital deployment and operational flexibility."