Demand for industrial and logistics properties is set to reach new heights across Europe and the UK, driven by increased defence spending. This is the conclusion of Savills' report "Savills Defence Logistics 2025", which points to the need for up to 37 million sqm of additional space by 2033 to meet growing direct and indirect logistics needs.
Based on the new target set by NATO at its June 2025 summit - to invest 3.5% of GDP in essential military capabilities - Savills estimates that industrial and logistics demand in Europe could increase by 17% compared to the 30 million sqm take-up recorded in 2024.
Currently, defence spending employs around 1 million people across Europe and supports approximately 35 to 40 million sqm of logistics and production space. Growth is expected to be concentrated mainly in the UK, France, Germany, Italy and Spain.
Sam Quellyn-Roberts, Director EMEA Industrial & Logistics Occupational Markets, Savills, says that "as in many manufacturing industries, the defence sector benefits greatly from economies of agglomeration. Defence companies and their suppliers tend to concentrate in certain hubs in Europe, taking advantage of skilled labour, specialised subcontractors and established supply chains. These clusters not only attract more employment, but also generate greater demand for industrial and logistics space in these regions. However, it should be noted that the defence sector has very specific real estate requirements, which means that meeting this demand will not be as simple as it is for traditional logistics or retail operators".