Cushman & Wakefield has identified 197 facility openings and investment announcements in defence-related manufacturing across Europe since the start of 2024. According to its new report, “Future Flows: Global Dynamics & European Industrial Real Estate”, a wave of defence investment worth hundreds of billions of euros is reshaping the European industrial real estate market.
More than half of the investments (54%) involve new facilities: 36% are new-build projects and 17% involve the acquisition, leasing or conversion of existing buildings. The remaining 46% relate to the expansion of existing plants. The most common requirement is for facilities of 10,000 to 25,000 sqm, with new units averaging around 20,000 sqm. Although some occupiers need specific security conditions or operational adaptations, many are taking conventional industrial buildings and adapting them for defence production.
The UK, Germany and France account for the largest number of new investments, reflecting their position as Europe’s biggest defence manufacturing markets. Significant activity was also recorded in Spain, Italy, Sweden, Turkey, Belgium and the Netherlands. Central and Eastern Europe, led by Poland, has become a key destination, particularly for artillery, ammunition and other defence production capacity.
Portugal carries little weight in the European analysis, but there are signs of the same trend in the country. Defence investment is already driving new industrial projects, such as the revitalisation of the Arsenal do Alfeite, which will strengthen national naval maintenance and modernisation capacity, and a planned drone factory announced by Keydef and Flying Wedge Defence and Aerospace, which aims to use Portugal as a production base for European and NATO markets.
The growth is being driven by a significant rise in defence spending by European governments and a push to source products and materials within Europe. Recent procurement commitments, some on a scale not seen in Europe for decades, have substantially increased manufacturers’ order books, particularly those of large contractors and tier-one suppliers. As major programmes enter production, Cushman & Wakefield expects smaller suppliers to invest in production capacity and industrial space, especially in markets where defence supply chains rely on small and medium-sized companies, such as Italy, Spain and the Netherlands.
“Although some defence-related activities require specific facilities, much of the demand can be accommodated in conventional industrial and logistics assets, opening up opportunities both for new projects and for the refurbishment and repositioning of existing space. In Portugal, this could become a new source of demand for the industrial and logistics sector, with the potential to attract investment and create skilled jobs”, noted Sérgio Nunes, Head of Industrial & Logistics at Cushman & Wakefield Portugal.
EU defence spending is projected to rise from €419 billion in 2025 to €547 billion in 2029, and spending on defence equipment between 2026 and 2029 is expected to exceed the total for the previous decade. Cushman & Wakefield therefore sees demand for defence-related industrial and production space as a structural growth trend in the European logistics and industrial real estate market.
