India’s Manufacturing Momentum Reshapes Industrial Real Estate Demand

India’s ambition to emerge as a global manufacturing powerhouse is reshaping the country’s industrial real estate landscape in a significant way. Over the past four years, manufacturing led leasing has grown rapidly as companies across sectors prioritise better quality facilities that can support modern production requirements, automation systems, and global compliance standards. This shift has triggered a notable rise in demand for Grade A industrial spaces, particularly in the western and southern markets.

Pune and Chennai continue to lead the momentum, together accounting for a majority share of the overall requirement for leased production spaces. These cities offer strong infrastructure, connectivity, talent availability, and a thriving ecosystem of suppliers that make them attractive locations for domestic and international manufacturers. Bengaluru, Mumbai, and NCR are also seeing increased activity as companies expand operations in auto ancillaries, electronics, engineering products, and consumer goods.

Industry reports indicate that leased production spaces have grown significantly from 2020 to 2024, reflecting a clear change in strategy. Instead of investing large amounts in land and construction, companies are adopting a lease first approach to remain efficient with capital while accessing fully built and ready to operate facilities. Developers are responding to this long term shift by creating high specification assets complete with sustainability features, hygiene compliant infrastructure, and automation readiness.

The growing preference for Grade A assets is now one of the most defining trends in the sector. Better floor strength, efficient layouts, safety standards, and energy friendly features are pushing manufacturers to upgrade from older buildings to newer structures that support modern production lines. Rents for Grade A facilities have also risen steadily and are expected to continue appreciating in the coming years as demand remains strong.

With integrated supply chains, global competitiveness, and faster production cycles becoming business priorities, India’s manufacturing led demand is expected to remain the biggest contributor to the industrial and logistics real estate sector. The next phase of growth will be driven by companies seeking speed to market, operational efficiency, and world class infrastructure.