What's Happening?
India's manufacturing space leasing reached a record high in the first half of 2025, with transactions totaling 9 million square feet. This marks a 38% increase from the previous year and is six times the pre-pandemic levels. The growth is driven by a shift towards asset-light models, where companies lease Grade A warehousing facilities instead of acquiring land. This approach allows for faster operational rollout and flexibility to adapt to changing market demands. Major cities like Bengaluru, Pune, and Delhi NCR are leading the demand, with Grade A spaces constituting 55% of the total stock.
AD
Why It's Important?
The surge in manufacturing space leasing reflects a strategic evolution in India's industrial real estate market. By adopting asset-light models, companies can optimize capital deployment and focus on operational efficiency. This trend is significant as it enhances the competitiveness of India's manufacturing sector, attracting more investment and fostering economic growth. The emphasis on Grade A facilities indicates a demand for high-quality infrastructure, which can support advanced manufacturing processes and innovation.
What's Next?
The industrial real estate market in India is expected to continue growing, with projections for year-end absorption reaching 55-57 million square feet. This expansion will likely lead to increased investments in infrastructure and logistics, further solidifying India's position as a manufacturing hub. Companies may continue to favor asset-light models, driving demand for leased spaces that offer flexibility and scalability. The concentration of demand in major cities suggests ongoing urbanization and industrialization trends.
