India Manufacturing Surge Boosts Industrial Real Estate Demand Across Key Urban Hubs
India’s manufacturing sector is driving an unprecedented surge in industrial real estate demand, with leasing activity for Grade‑A factories and warehouses reaching record levels across major urban hubs. Analysts report that manufacturing space absorption is set to climb from 22.1 million square feet in 2024 to over 33 million square feet by 2027, highlighting a structural shift towards modern, compliance-ready industrial facilities that balance operational efficiency with sustainability and regional economic growth.
Industry experts note that the preference for Grade‑A or build-to-suit facilities has accelerated, as manufacturers seek spaces that meet stringent safety, automation, and environmental standards. “Companies are increasingly opting for ready-to-operate premises, which allow faster expansion while reducing upfront capital expenditure,” said a senior real estate analyst. This trend reflects broader market dynamics, including the push for asset-light models and the integration of sustainable practices in industrial operations.Geographically, the majority of demand is concentrated in key urban and peri-urban hubs, including Pune, Chennai, Bengaluru, Delhi NCR, Mumbai, and Hyderabad. Combined, Pune and Chennai alone account for approximately 75 per cent of total manufacturing leasing among top-tier cities. These regions are attracting sectors such as automotive, electronics, white goods, and engineering, all of which require high-specification facilities capable of meeting both operational and regulatory benchmarks.
The demand spike is underpinned by favourable government policies promoting advanced manufacturing and infrastructure development. Incentives for industrial growth, coupled with streamlined approvals for industrial parks, are encouraging companies to lease or invest in modern facilities. Analysts also point out that this leasing-led expansion allows companies to optimise land use and reduce the environmental footprint relative to greenfield construction.From a planning perspective, the rapid absorption of industrial space raises important questions about urban sustainability. Concentrating large manufacturing facilities in a few regions may strain existing infrastructure, inflate land values, and alter peri-urban land use patterns. Urban planners stress the need for integrated development strategies that combine industrial growth with transport planning, green buffers, and equitable access to local communities.Meanwhile, investors are responding to the market shift with increased funding for build-to-suit and speculative industrial parks. Rising demand for high-quality, compliance-ready facilities has triggered a wave of industrial development projects, ensuring that supply keeps pace with the growing need for manufacturing space. This trend is also shaping the broader logistics ecosystem, with modern warehousing emerging as a critical link in India’s supply chain resilience.
As India’s manufacturing sector continues to expand, the industrial real estate market is entering a transformative phase. Striking a balance between rapid facility development, sustainable practices, and inclusive urban planning will be crucial to ensure that industrial growth contributes positively to economic development while supporting resilient and equitable cities.
