Defense investment drives European industrial real estate demand

Increased European defense spending is driving significant demand for industrial real estate, including new production facilities, factory expansions, and the conversion of existing buildings. A study by Cushman & Wakefield identified 197 facility openings or investment announcements related to defense production across Europe since the start of 2024.

More than half of these investments involve new facilities, with 54% of the total. This includes 36% for greenfield construction projects and 17% for the acquisition, leasing, or conversion of existing buildings. The remaining 46% involve the expansion of current industrial units. The United Kingdom, Germany, and France represent the largest markets for defense production in Europe, with notable activity also recorded in Spain, Italy, Sweden, Turkey, Belgium, and the Netherlands. Central and Eastern Europe, led by Poland, has emerged as a key destination for investments in artillery and ammunition.

In Portugal, defense investment is viewed as a strategic economic driver. Projections suggest the country may spend approximately ten billion euros in the sector over the next decade. Local developments include the revitalization of the Alfeite Arsenal for naval maintenance and modernization, as well as planned drone manufacturing projects by Keydef and Flying Wedge Defence and Aerospace.