The UK has pledged to raise defence spending to 2.5% of GDP by 2027, with further targets of up to 3.5% under NATO commitments. This uplift translates into sustained investment in defence manufacturing, procurement, and logistics infrastructure. A recent report from Savills (“Defence Logistics 2025”) highlights the growing importance of defence spending—via the UK’s Strategic Defence Review and NATO commitments—as a driver of industrial and logistics real estate demand.
Savills estimates that under a 3.5% GDP-spend scenario, the UK could see up to 3.0 million sq m of additional industrial and logistics demand over the next seven years—equivalent to approximately 423,000 sq m per year of additional take-up. Employment growth within the defence manufacturing and logistics supply chain could reach 60,000 additional jobs by 2030, driving heightened demand for secure storage, advanced manufacturing, and last-mile facilities.
For landlords and investors, this presents both opportunity and complexity. Our experience demonstrates that Defence sector tenants often require bespoke premises with enhanced security, power, and operational resilience, meaning fit-for-purpose facilities are at a premium.
Planning and regulatory processes can also be more stringent and time-consuming for defence-related uses.
Competition for land is expected to intensify as defence adds another demand stream alongside e-commerce and traditional logistics occupiers. This may place upward pressure on rents and capital values, particularly in regions with established defence clusters or supply-chain infrastructure. Long-term leases and covenant strength remain attractive features, though investors should remain alert to political and funding-cycle risks inherent in public sector-linked tenants.
