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, a 38% increase from the previous year. This growth is six times higher than pre-pandemic levels in 2019. The demand for Grade A warehousing facilities has risen, constituting 55% of the total stock across major cities. The industrial real estate market is undergoing a structural shift, with manufacturing leases accounting for 24% of all transactions. Key cities like Bengaluru, Pune, NCR Delhi, Chennai, and Mumbai are driving this demand, representing 90% of the net absorption.
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Why It's Important?
The surge in manufacturing space leasing reflects India's expanding industrial sector, which is crucial for economic growth and job creation. The increased demand for quality manufacturing spaces indicates a shift towards asset-light approaches and turnkey facilities, optimizing capital deployment. This trend benefits industries such as automotive, engineering, electronics, and white goods, enhancing their operational efficiency. The growth in manufacturing space leasing also highlights the importance of strategic markets in India's industrial landscape, contributing to the country's overall economic development.
What's Next?
The continued growth in manufacturing space leasing is expected to drive further investments in infrastructure and logistics. Built-to-Suit transactions, which offer customized facilities, are likely to increase, commanding higher rents due to tenant-specific improvements. As demand for manufacturing spaces rises, developers may focus on expanding Grade A warehousing facilities to meet industry needs. Monitoring the geographic concentration of demand will be essential for stakeholders to capitalize on emerging opportunities and address challenges in the industrial real estate market.
