Engineering and Manufacturing sector touches historic high in office leasing volumes

For representational purpose

The Engineering and Manufacturing sector has contributed a significant 15-18 percent share in the overall office leasing volume across the top eight cities in 2021 and 2022, says Cushman & Wakefield’s latest report “The Manufacturing Sector- Growth Story of India”.

The report stated that it is the highest leasing done by the Engineering and Manufacturing sector in history, as during the 2017-18 period the share of this sector used to be not more than six percent on average.

According to the Cushman & Wakefield report, over the last five-six years, gross lease volume (GLV) has suggested the rising activity within the Engineering and Manufacturing space, particularly since the Production Linked Incentive (PLI) scheme was introduced in 2020.

It said this growth is being driven by several factors, including the Central Government’s Make in India initiative and the PLI schemes, which have a potential to generate an additional production of Rs 30 lakh crore by 2027.

Occupiers within the sector have pursued active leasing of office space across the top eight cities in India which include Bengaluru, Delhi-NCR, Mumbai, Hyderabad, Pune, Chennai, Kolkata and Ahmedabad. Almost 70 percent of the sector’s overall office demand was concentrated in Bengaluru (25 percent), Delhi-NCR (25 percent), and Mumbai (19 percent).

It added that in the last five years, chip manufacturing and electronic equipment took an almost 36 percent share, becoming the largest two engineering and manufacturing sub-sectors driving the demand.

The growth of the Engineering and Manufacturing sector has also positively impacted the flex space segment as the sector’s contribution in the flex space market has also grown from three percent to nine percent in the last three years (2020-22).

Commenting on the findings, Gautam Saraf, Managing Director, Mumbai and New Business, said, “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 favourable 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 said: “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.”