Logistics, not barracks, emerges as defence's real estate play

Rueckerconsult webinar: Wachstumsmarkt Verteidigung: Welche Immobilien-Anforderungen haben Militär und Industrie?

Germany's defence property market has moved beyond forecasts and white papers. GARBE Industrial Real Estate recently signed a lease for 10,000 square metres with a direct defence occupier at a German location — one of the first publicly disclosed transactions of its kind. "We are out of the discussion phase and firmly into the implementation phase," Jan Philipp Daun of GARBE Industrial told a Rueckerconsult webinar on defence and real estate this week. "This market is running."

The backdrop is well understood. European defence spending is rising sharply, and an increasing share is being directed towards equipment, production and supply chains rather than personnel and administration. What was previously around 20% of NATO defence budgets is forecast to rise to 45% by 2029. At the same time, more of that spending is expected to remain within Europe. Tobias Kassner, Head of Research at GARBE Industrial, estimates this could translate into demand for between 37 and 74 million square metres of production, logistics and supply-chain space across Europe over the next five years. Even the lower estimate would represent a substantial increase in industrial and logistics demand.