Europe's Defence Push and Logistics Real Estate

European defence spending is set to drive a meaningful 8-20% increase in logistics real estate demand as countries prioritize local production and supply chain resilience. However, the impact will be concentrated in existing industrial hubs and largely delivered through owner-occupied facilities.

Key Takeaways

• 1.Defence spending is a new demand driver for European logistics real estate, potentially adding 8-20% to annual take-up over the next decade.
• 2.The impact will be focused on local production and reshoring, with the EU aiming to procure 50-60% of defence needs domestically by 2030-2035.
• 3.Institutional investment opportunities are significant but limited, as 70-80% of demand is expected to be 'build-to-own' or 'build-to-suit' bespoke facilities.

Table of Contents

• How Europe's defence spending could boost logistics real estate
• The demand story is there
• Leasing of industrial and logistics space by defence-related companies in the UK
• Scenarios -- how much additional demand could there be?
• Scenarios for incremental real estate demand
• Three ways defence spending impacts real estate
• Where will the impact be largest?
• The uneven race in the growing need for space
• No shock offensive, but a slow build-up
• The bottom line – marching toward more demand

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