Renewed Manufacturing Push 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 strategic shift towards asset-light models. Manufacturing space leasing surged by 38% in H1 2025, reaching 9.0 million sq. ft, with Grade A spaces leading the way.
Industrial Real EstateManufacturingGrade A SpacesLeasingAssetlight ModelsReal Estate NewsAug 19, 2025
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 growth in India's industrial and logistics real estate market?
The growth is driven by a renewed manufacturing push, policy incentives, and a strategic shift towards asset-light models, where companies prefer leasing Grade A and build-to-suit spaces over capital-heavy land acquisition.
How much did manufacturing space leasing increase in H1 2025 compared to H1 2024?
Manufacturing space leasing increased by 38% in H1 2025, reaching 9.0 million sq. ft from 6.5 million sq. ft in H1 2024.
What percentage of India’s total I&L stock is represented by Grade A facilities?
Grade A facilities represent 55% of India’s total 463.2 million sq. ft of I&L stock across the eight leading cities.
Which cities are leading the net demand in the industrial and logistics real estate market?
Bengaluru, Pune, Delhi NCR, Chennai, and Mumbai collectively account for 90% of India’s net demand in the industrial and logistics real estate market.
What sectors are the most active in leasing transactions within the manufacturing segment?
The most active sectors in leasing transactions within the manufacturing segment are automotive, engineering, electronics, and white goods.
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