The engineering and manufacturing sector have reached a historic high in office leasing volumes, according to a recent report by Cushman & Wakefield. The report indicates that this sector now holds a substantial 15-18 percent share in office leasing across India’s top eight cities, with the surge attributed to the Make in India and Production Linked Incentive (PLI) initiatives.
Cushman & Wakefield’s latest report, titled “The Manufacturing Sector – Growth Story of India,” highlights that this leasing activity is the highest ever recorded in the sector’s history. In contrast, during the 2017-18 period, the sector’s share averaged no more than six percent.
Over the past five to six years, the gross lease volume (GLV) reflects increasing activity within the Engineering and Manufacturing sector, particularly since the introduction of the PLI scheme in 2020. The report cites various factors contributing to this growth, including the Central Government’s Make in India initiative and PLI schemes, which could potentially generate an additional production of Rs 30 lakh crore by 2027. Office space leasing within this sector has been particularly concentrated in the top eight cities, including Bengaluru, Delhi-NCR, Mumbai, Hyderabad, Pune, Chennai, Kolkata, and Ahmedabad. Bengaluru, Delhi-NCR, and Mumbai accounted for nearly 70 percent of the sector’s overall office space demand.
Furthermore, the report identifies that in the past five years, chip manufacturing and electronic equipment sub-sectors have held a significant 36 percent share, making them the leading drivers of demand within the Engineering and Manufacturing sector.
The growth in the Engineering and Manufacturing sector has also positively impacted the flex space segment, with its contribution increasing from three percent to nine percent between 2020 and 2022. Gautam Saraf, Managing Director, Mumbai, and New Business, commented on the findings, stating, “The Engineering and Manufacturing sector has emerged as one of the top three segments in the office absorption space. As India steadily evolves into a global manufacturing hub on the back of favorable policies such as the Make in India initiative and the PLI schemes, the office market will further benefit from the increased demand from occupiers in the sector.”
Abhishek Bhutani, Managing Director, Ahmedabad, and Logistics and Industrial, added, “The growth of the manufacturing sector presents interesting opportunities for the real estate industry. As the manufacturing sector expands, there is an increased demand for industrial and logistics spaces, creating prospects for real estate development in the peripheral locations of major cities.”