Leased manufacturing space's absorption touch 6.6 million sq ft in 2020: Report

Chennai, Pune and Delhi NCR have been in the pole positions in 2020, with nearly 3/4th of the total leased manufacturing absorption, according to the report.

NEW DELHI: While historically, large & medium scale manufacturers usually opted to buy land and build their factories, the concept of 'leased manufacturing spaces' has been gaining strength in the country over the years.

Demand for leased manufacturing spaces has gained strength in 2020 with gross absorption of 6.6 million sq ft in top eight cities, according to a recent report by JLL India.

Leased manufacturing spaces mean leases of built spaces (on monthly rentals) used for assembling and light manufacturing activities.

"Built manufacturing spaces for leasing offers several advantages to faster entry in high-end/globally comparable specifications, captal expenditure to operating expense conversion, easy approvals for many sectors, etc.

Additionally, incentives are available under several buckets for manufacturing in such built space. In near to medium term, outlook for such flexi, fast and customised (BTS) options in manufacturing are expected to be very strong.” said Yogesh Shevade, head (Industrial Services-India), JLL.

Chennai, Pune and Delhi NCR have been in the pole positions in 2020, with nearly 3/4th of the total leased manufacturing absorption, according to the report.

Chennai and surrounding areas topped the chart with over 36% of absorption driven by pro-active governance, developed manufacturing ecosystem, proximity to multiple seaports, etc.

Pune stood second with around 20% of manufacturing-built lease supported by strong ecosystem, organised supply and a large immediate catchment of urban conurbation of Pune and Mumbai.

Delhi NCR emerged a close third with 18% of such absorption in 2020 backed by strong manufacturing demand from sectors including electronics & mobile manufacturing, electrical equipment, white goods, packaging, among others.

Ahmedabad, Bengaluru, Mumbai & Hyderabad have also shown strong growth trends driven by sector specific requirements.

Built manufacturing spaces in India are also transforming to the changing needs of the sectors. For instance, lease tenure has gradually moved up from 3-5 years to 7-9 years and in some cases even 15 years, lock-in period have been seen to go up from 2-3 years to 5-7 years and in some cases up to 9 years, the report added.

Source: ETrealty.