The infrastructure demands of modern defence

The defence sector’s need for specialised industrial and logistics facilities across the UK & EMEA presents a complex real estate challenge. Unlike traditional commercial occupiers, defence organisations must navigate stringent security protocols, geopolitical sensitivities, and bespoke infrastructure requirements, all while competing with booming e-commerce and manufacturing sectors for limited suitable industrial and logistics space.

Security and compliance issues alone provide a multi-jurisdictional maze. Defence-related facilities must overcome and adhere to planning and bureaucratic hurdles, as well as strict government and NATO standards, which limit available options. Each country imposes its own defence real estate protocols and defence requirements. There may also be local council/community resistance, whereby authorities may oppose defence-related developments due to perceived risks or community objections. Leasing MOD-owned land involves lengthy negotiations, while some projects require additional security clearances, delaying occupancy. Environmental and safety regulations will also apply, so sites handling munitions or hazardous materials must comply with explosives regulations, adding another layer of scrutiny.

Defence facilities have specialised needs often requiring blast-proof reinforced structures for equipment storage, high ceilings, 24/7 manned security, CCTV, biometric access controls, and secure IT networks, which can increase capital expenditure for occupiers by 20–30% compared to standard industrial builds.

These requirements drastically reduce the pool of suitable properties, pushing defence firms towards bespoke developments rather than readily available industrial stock. One caveat to this is drone production, which comprise a substantial portion of enquiries we have received. Drones can often be produced in more conventional, less specialised facilities, opening up more locations for these manufacturers.

Furthermore, many institutional landlords are currently navigating challenges around responsible investing and their own ESG obligations. Some institutional landlords may decide that defence-related occupiers are incompatible with their portfolio, reducing the available pool of potential properties further.

When looking at shortlisting locations, proximity to ports (e.g. Portsmouth/Bristol, UK, Rotterdam, Netherlands, Gdansk, Poland or Bremerhaven, Germany), military hubs (e.g. Barrow-in-Furness, UK), or transport links is crucial – but these locations are in high demand from e-commerce and data centres as the booming last-mile logistics and data centre sectors are driving up land prices and rents, making it harder for defence firms to compete.

In Germany, Rheinmetall is building new artillery shell plants (Lower Saxony), which is a catalyst for 500,000+ sq m needed by 2030. Poland’s state-owned PGZ Group has unveiled plans to build three new ammunition factories as part of a major expansion of its defence manufacturing capacity, reflecting the country’s strategic importance on NATO’s eastern flank. This initiative will establish two advanced artillery shell production facilities – focusing on large-calibre rounds. These new facilities are expected to boost Poland’s ammunition output to 150,000–180,000 artillery rounds per year by 2028.

The increase in defence spending will certainly lead to industrial real estate growth. The UK, Germany, Italy, Poland, and France will see the biggest industrial demand from arms manufacturing, with heavy manufacturing, high-tech R&D, and secure logistics driving take-up. However, the sector will face a constrained market for industrial and logistics space, compounded by security, regulatory, and cost barriers. By collaborating with specialist developers, engaging government bodies early, and exploring innovative occupancy models, defence firms can secure the facilities they need to support national security and technological advancement.

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