India’s industrial and logistics (I&L) real estate market recorded unprecedented leasing activity in the first half of 2025, driven by a renewed manufacturing push, policy incentives, and the growing preference for asset-light models.
According to JLL India, manufacturing space leasing rose to 9.0 million sq ft in H1 2025, a 38 per cent increase from 6.5 million sq ft in the same period of 2024.
This figure is nearly six times higher than the 1.6 million sq ft leased in H1 2019, before the pandemic reshaped supply chain priorities.
Industry experts highlight that manufacturing firms are increasingly moving away from capital-intensive land acquisition, opting instead for leasing Grade A and build-to-suit facilities. This strategy allows faster operational rollouts while ensuring flexibility to meet shifting demand cycles.
Grade A infrastructure remains at the heart of this transformation, accounting for 55 per cent of India’s total 463.2 million sq ft of I&L stock across eight leading cities: Mumbai, Delhi NCR, Kolkata, Chennai, Bengaluru, Pune, Ahmedabad, and Hyderabad.
Net absorption in H1 2025 reached 24.6 million sq ft, with Grade A facilities capturing 81 per cent of demand. For the full year, overall absorption is projected to touch 55–57 million sq ft, marking a 12–15 per cent rise over the 50 million sq ft achieved in 2024.
Manufacturing leases gain traction
“India’s industrial real estate market is undergoing a structural shift, as manufacturing leases now make up 24 per cent of all transactions in H1 2025,” said Yogesh Shevade, Head (Industrial & Logistics), India, JLL.
He further added that the projected absorption of 55–57 million sq ft by year-end underscores the tangible impact of increased manufacturing investment.
Bengaluru, Pune, Delhi NCR, Chennai, and Mumbai collectively accounted for 90 per cent of the country’s net demand, demonstrating geographic consolidation in major industrial hubs. Bengaluru led leasing activity, followed by Pune, Delhi NCR, Chennai, and Mumbai.
The demand base has remained diversified. Third-party logistics (3PL) firms contributed 28 per cent of leasing activity, while light manufacturing accounted for 24 per cent.
Within manufacturing, key sectors driving demand included automotive, engineering, electronics, and white goods.
Built-to-suit facilities are also gaining momentum, offering tenants customised solutions and commanding a 20–25 per cent rent premium over standard warehousing. Pune and Chennai, with their strong industrial ecosystems and robust supply of Grade A spaces, have emerged as leading destinations for such premium deals.
With strong government support for manufacturing, favourable policy incentives, and a clear industry shift toward asset-light strategies, India’s industrial real estate market is poised for sustained growth.
Experts believe that the increasing appetite for Grade A and build-to-suit facilities will reinforce the sector’s transformation in the years ahead.
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