Have you reached the maximum level that you can get without moving past the next research? You will be able to tell because instead of saying "upgrade" the button will say "research". The only other possibility I can think is that even though you have the squares available sometimes it wants to upgrade in the direction that would cover your road. In that situation the button should say "move and upgrade".
hello @LovingHorus, The space you have for upgrading needs to be to the front and to your left of the manufactures as you look at them...if the space is say, to the back or right side (still looikng at them, you will get a "move & upgrade" message. Buildings that grow as they upgrade do so to the front & left; when I have this problem I place the building somewhere else, upgrade it, then put it back where I wanted it, or create a temporary road behind them then delete it after the upgrade...I can't see your land's limit, but the manufactory on the left is touching the road on the left, hence the upgrade hindrance, I think. Then again, it also depends which chapter you're in...maybe you have reached that chapter's manufactory's upgrade limit?