Multi-billion-euro investments in European defence are having a noticeable impact on the market for industrial and manufacturing real estate. In its latest report 'Future Flows: Global Dynamics & European Industrial Real Estate', property consultancy Cushman & Wakefield identifies a total of 197 new projects in the European defence sector between the beginning of 2024 and August 2026.
The industry is thereby responding to a shifting security policy environment and expanding capacity for high-volume production. More than half of the recorded schemes (54 per cent) involve new facilities. Of these, over 36 per cent relate to new-build projects, whilst a good 17 per cent account for lettings, acquisitions or conversions of existing buildings. The remaining 46 per cent concern expansions of existing production facilities.
Core markets in the United Kingdom, Germany and France
More than 40 per cent of all recorded projects, totalling over 80 schemes, are concentrated in the United Kingdom, Germany and France. These are followed by Spain, Poland, Italy, Sweden, Turkey, Belgium and the Netherlands, among others, each with country-specific focal points. According to Sally Bruer, Head of EMEA Logistics & Industrial Research at Cushman & Wakefield, current momentum differs from earlier cycles: space requirements are no longer confined to a handful of major corporations, but increasingly encompass the entire industrial supply chain.
In Germany, 27 projects comprising approximately 500,000 square metres of production and logistics floor space were registered. Prominent companies involved include Rheinmetall, KNDS, Thales Group, CSG, Diehl and Quantum. The schemes are spread across various segments of the defence sector:
- —Five projects in artillery and ammunition
- —Four projects each for aircraft and watercraft, as well as systems and components
- —Three projects each in the segments of drones and autonomous vehicles, vehicle manufacturing, and weapons, supplemented by four further projects outside these categories
Space profiles and prospects for existing properties
The most frequently sought building size ranges between 10,000 and 25,000 square metres, with the average for new developments standing at around 20,000 square metres. Rainer Koepke, Head of Logistics & Industrial Agency Germany at Cushman & Wakefield, notes that demand is primarily driven by owner-occupiers in manufacturing. For less sensitive products, occupier-specific lettings as well as speculative new developments or vacated space from the automotive sector are also occasionally of interest.
European efforts to secure supply chains and concentrate manufacturing capacity within its own economic area are expected to bolster demand for industrial real estate over the medium term. Because a substantial share of demand can be accommodated within conventional real estate structures, this trend opens up opportunities for repositioning schemes and new-build projects alike.
