European industry transforms amid defense spending and Chinese expansion

The European industrial landscape is undergoing a significant transformation driven by increased defense spending and the expanding physical presence of Chinese companies. According to a report by Cushman & Wakefield, the European rearmament effort is stimulating industrial real estate, with 197 operations recorded since the start of 2024. While many projects involve expanding existing facilities, 54% are linked to new installations, primarily in Germany, France, and the United Kingdom.

NATO members are projected to allocate approximately $181 billion to defense equipment in 2025, a figure expected to rise to $232 billion by 2026. Within the EU, total defense spending is forecasted to grow from €419 billion in 2025 to €547 billion by 2029. However, experts note that European rearmament remains fragmented, with roughly one-third of military equipment being imported, more than half of which comes from the United States.

To mitigate supply constraints and inflation, there are calls for better coordination of industrial investments and joint procurement. Simultaneously, Chinese manufacturers, retailers, and logistics firms are increasing their physical footprint across Europe to bring production and distribution closer to local markets.