Cannes, France. 10 March 2026. The surge in European defence budgets could spur a geographical ‘reframing’ of smart logistics real estate investment around military manufacturing and transport hubs and spur the next growth phase in the sector, research from global real assets manager PATRIZIA concludes.
NATO allies made the historic commitment at The Hague Summit in 2025 to invest 5% of GDP annually in defence spending by 2035, of which 1.5% will be allocated to areas such as critical infrastructure, including energy supplies and logistics, and strengthening their military/industrial base.
Industrial real estate demand has declined sharply across European markets in the wake of the Covid pandemic post-2022 on weak economic growth, rising cost pressures, e-commerce overcapacity and a normalisation in supply inventories. But investment volumes in logistics assets remain above long-term averages, signalling sustained investor conviction in the sector (22% of total real estate capital in 2025 versus 13% in 2018). *
Emile Poort, PATRIZIA Head of Investment Management Logistics, said: “The tailwinds are blowing favourably towards a strong military manufacturing revival, and we believe this will boost demand for ‘smart logistics’ assets around defence company clusters and associated infrastructure across Europe, driving a sustained upturn in investment.”
He was speaking at the annual MIPIM real estate trade fair in Cannes in the south of France.
The main drivers for smart logistics investment in a defence manufacturing revival are:
- Winning clusters: Locations with specialised labour, R&D and production including: Munich, Paris, Toulouse (Airbus). Netherlands (Eindhoven, Randstad Region); Italy (Milan, Varese and Turin); Prague.
- Concentrated pools of demand: A few ‘asset light’ companies national/European champions looking for real estate partners for expansion and infrastructure rollout including: Safran and Thales (FR); Rheinmetall and Hensoldt (DE); BAE Systems (UK); Leonardo (IT) and SAAB AB (SE).
- Repurposing of ‘mid-box’ facilities and developing bespoke assets: High-specification sites tailored for military logistics and production will be needed; sale-and-leasebacks expected to increase.
- Changing lease structures: Better cash flow visibility: ‘Net lease’ structures more common to accommodate for longer stays; manufacturing tenants look to amortize their capital investment equipment over a longer period.
Riding the defence logistics megatrend
Defence investment requires smart logistics assets running digital automation and tracking, assisted by AI, with operations being data-driven -- including the technology aspect of defence and energy assets themselves. Secure supply chains are essential and will be supported by blockchain.
Last-mile logistics hubs will increasingly be needed to support defence-related manufacturing and energy distribution to facilitate rapid delivery and strategic stockpiling.
The European energy transition towards renewable creates demand for logistics hubs near energy corridors, such as hydrogen infrastructure projects in Northern Germany and the Netherlands supporting green energy distribution. And the growth in defence- and energy-driven logistics assets will also need to work in tandem with proximity to a resident employee base, which can shape solutions like developing apartments around logistics parks or co-living spaces near urban centres to address labour shortages.
European locations likely to lead in logistics defence investment
While the focus on defence and energy in the sector will be wide-ranging, there are markets which are likely to benefit most from investment in the new logistics landscape. Eastern Europe and NATO border countries will require logistics assets near military bases and transport corridors. An example of the kind of assets which will fit this demand are smart warehouses in Poland equipped with Internet of Things (IoT) sensors for real-time inventory tracking.
Defence-related manufacturing will see an uptick in cities with strong industrial bases such Munich, where its aerospace supply chain is supported by robotics-enabled warehouses.
Energy corridors and ports will be desirable locations from an energy security perspective. Strategic hubs for liquefied natural gas (LNG) and renewable energy sources will require advanced storage and distribution facilities. Rotterdam falls into this category, with LNG terminals in the port already using automated scheduling and blockchain for secure energy flows.
* Source: Savills
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PATRIZIA
PATRIZIA has been providing investment opportunities in smart real assets for institutional, semi-professional, and private investors for more than 40 years, focusing on real estate and infrastructure. PATRIZIA’s investment solutions are driven by the “DUEL” megatrends - digital, urban, energy and living transitions - and capitalise on the opportunities arising from these transformative global shifts. PATRIZIA currently has approximately EUR 56bn in assets under management (AUM) and employs around 800 professionals across 26 locations worldwide.
PATRIZIA has been committed to making a positive impact since its founding. In 1992, the company began collaborating closely with Bunter Kreis (“Colourful Circle”) in Germany to provide aftercare for children with severe diseases. Since 1999, the PATRIZIA Foundation has provided more than 750,000 children and young people worldwide with access to education, healthcare and a safe home, enabling them to live better, self-determined lives.