India’s manufacturing boom continues to reshape the country’s industrial real estate landscape, with leasing demand projected to reach 34 million sq ft by 2027 across the top eight cities. According to a new JLL report, this volume would represent 46 per cent of India’s total industrial and warehousing absorption, underscoring manufacturing’s growing dominance in the sector. The consultancy noted that manufacturing leasing reached 22.1 million sq ft in 2024, with demand expected to maintain strong momentum through 2027.

JLL’s report, From Make in India to Made by India: Advanced Manufacturing Real Estate Lifecycle, highlights a marked rise in Grade A property demand, which has increased from 70 per cent in 2019 to 82 per cent in 2024, reaching 87 per cent by Q3 2025 in the top cities. This shift reflects heightened requirements for customised, high-specification facilities driven largely by the auto and ancillaries, electronics and white goods, and engineering sectors.

The demand surge is influenced by upgraded building standards, stricter hygiene protocols, green-building requirements and advanced safety compliance—all of which increasingly distinguish modern manufacturing units from traditional warehousing facilities. As of Q3 2025, Pune and Chennai were the leading markets for manufacturing leasing, jointly accounting for 75 per cent of total demand in India’s Tier I cities. Bengaluru, Mumbai and NCR are also witnessing accelerated leasing activity, reinforcing the sector’s nationwide growth.

The report notes a clear rise in lease-first strategies among manufacturing companies, who are favouring ready-built and built-to-suit facilities to optimise capital expenditure. These “capex-light” models enable firms to focus resources on core operations while securing fully compliant, operationally ready facilities. JLL further states that over 76 per cent of ready-built facility demand between 2019 and Q3 2025 was concentrated in Pune, Chennai and NCR.

On the rental front, Grade A light manufacturing space across the eight key cities has registered steady appreciation over the past five years. JLL projects annual rental growth of 4–6 per cent, supported by sustained demand from engineering, auto and ancillaries, and electronics sectors. Manufacturing facilities command premiums over standard Grade A warehouses due to their higher technical specifications and more stringent compliance requirements.

The report also underscores the contribution of advanced manufacturing to India’s industrial expansion. The country is sharpening its focus on eight priority segments—electric mobility, renewable energy, semiconductors, medical devices, precision tools, aerospace and defence, cellular and related electronics components, and heavy equipment. Supported by government incentives and strategic initiatives, this thrust aims to raise manufacturing’s contribution to 25 per cent of GDP as part of India’s journey toward Viksit Bharat by 2047.

Looking ahead, JLL emphasises that the manufacturing sector’s transformation of India’s industrial and logistics real estate reflects broader trends toward enhanced capabilities, quality-driven operations and efficiency. It advises companies entering or expanding within Indian manufacturing to prioritise Grade A facilities in established clusters and leverage lease structures to maximise capital flexibility and operational scalability.

(Source: Fortune India)