Manufacturing Surge Fuels Record Leasing in India’s Industrial Real Estate
India's industrial and logistics real estate market is witnessing a significant transformation, driven by a renewed manufacturing push and a shift towards asset-light models. Net absorption in H1 2025 reached 24.6 million sq. ft, with Grade A spaces dominating the market.
Industrial Real EstateManufacturingGrade A SpacesAssetlight ModelsNet AbsorptionReal Estate PuneAug 19, 2025
A renewed manufacturing push, policy incentives, and a strategic pivot toward asset-light models are reshaping India’s industrial and logistics (I&L) real estate market. The first half (H1) of 2025 has set a new benchmark, with manufacturing space leasing climbing to 9.0 million sq. ft, up 38% from 6.5 million sq. ft in H1 2024, data from JLL India showed.
This is nearly six times the 1.6 million sq. ft recorded in H1 2019, before the pandemic transformed supply chain priorities. The momentum underscores how manufacturing firms are steadily shifting away from capital-heavy land acquisition toward leasing Grade A and build-to-suit spaces. This approach enables faster operational rollout while offering the flexibility needed to meet evolving demand cycles.
Grade A infrastructure continues to dominate this transformation. As of H1 2025, such facilities represent 55% of India’s total 463.2 million sq. ft of I&L stock across the eight leading cities: Mumbai, Delhi NCR, Kolkata, Chennai, Bengaluru, Pune, Ahmedabad, and Hyderabad. Net absorption during the six months stood at 24.6 million sq. ft, with Grade A spaces capturing an overwhelming 81% share, the data showed.
Overall absorption for the full year is projected to reach 55–57 million sq. ft, a 12–15% increase from the 50 million sq. ft clocked in 2024. “India’s industrial real estate market is experiencing a fundamental structural shift, evidenced by manufacturing leases comprising 24% of all transactions in H1 2025. With projections indicating year-end absorption reaching 55–57 million sq. ft—a notable increase from 50 million sq. ft in 2024—we are witnessing the tangible impact of increased manufacturing investment,” said Yogesh Shevade, Head (Industrial & Logistics), India, JLL.
According to him, the geographic concentration is equally telling, with Bengaluru, Pune, Delhi NCR, Chennai, and Mumbai collectively accounting for 90% of India’s net demand. This six-fold increase in manufacturing leasing reflects not just market growth but a strategic evolution toward asset-light models, as manufacturers increasingly opt for Grade A and build-to-suit spaces to circumvent land acquisition challenges and achieve faster operational timelines.
City-level trends reinforce this consolidation. Bengaluru led net demand in H1 2025, followed by Pune, Delhi NCR, Chennai, and Mumbai. Together, these five markets accounted for 90% of the country’s absorption, underlining their role as industrial and logistics hubs. Sectoral drivers remained diversified, with 3PL/logistics firms contributing 28% of leasing transactions and light manufacturing close behind at 24%. Within manufacturing, automotive, engineering, electronics, and white goods were the most active segments.
Built-to-suit deals are also gaining traction, commanding a 20–25% rent premium over standard warehousing due to tenant-specific improvements. Pune and Chennai, with their deep industrial ecosystems and abundant Grade A stock, continue to capture a large share of such deals, reflecting the sector’s steady premiumisation.
Frequently Asked Questions
What is driving the surge in manufacturing space leasing in India?
The surge is driven by a renewed manufacturing push, policy incentives, and a strategic shift towards asset-light models. Manufacturers are increasingly opting to lease Grade A and build-to-suit spaces to achieve faster operational timelines and meet evolving demand cycles.
What is the projected overall absorption for the full year 2025 in India's industrial real estate market?
The overall absorption for the full year 2025 is projected to reach 55–57 million sq. ft, a 12–15% increase from the 50 million sq. ft recorded in 2024.
Which cities are leading in net demand for industrial and logistics spaces in India?
Bengaluru, Pune, Delhi NCR, Chennai, and Mumbai are leading in net demand, collectively accounting for 90% of India’s net demand in the industrial and logistics sector.
What sectors are the most active in leasing transactions within manufacturing?
The most active sectors in leasing transactions within manufacturing include automotive, engineering, electronics, and white goods.
What is the significance of built-to-suit deals in the industrial real estate market?
Built-to-suit deals are gaining traction as they command a 20–25% rent premium over standard warehousing due to tenant-specific improvements. These deals are particularly prevalent in cities like Pune and Chennai, which have deep industrial ecosystems and abundant Grade A stock.
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