European defence tech boom reshapes real estate landscape

Europe's defence sector is undergoing a significant transformation, driven by innovation and technology, and backed by up to €800 bln in spending.

Karin Witalis - Colliers

This shift is profoundly impacting both the geographical distribution and the types of real estate required across the continent, as highlighted in a new report from Colliers.

In "Defence Deployment: How Europe’s military build-up and transformation reshapes property demand," Colliers identifies 38 distinct defence tech clusters across Europe. These clusters, each with unique strengths, are influencing the location and building specifications for occupiers.

The rise of defence technology is moving real estate demand away from large, remote industrial sites towards urban, innovation-focused locations. This trend is fueling demand for secure, hybrid properties that integrate laboratories, engineering offices, and light industrial space, with a preference for combined office and R&D environments over traditional workspaces.

Beyond location, the report emphasises evolving technical requirements. Defence and defence tech companies need buildings that support complex operational, technical, and security demands, including security, infrastructure, safety and location.

Special requirements include controlled access, surveillance, and compliance with defence regulations; adequate power supply, logistics capabilities, and technical systems; compliance for handling specialised or hazardous materials; and proximity to skilled labour, suppliers, transport infrastructure, and existing defence clusters.

Colliers notes a clear distinction in real estate demand between traditional defence and defence technology activities. Traditional defence still requires heavy manufacturing plants, large logistics warehouses, and outdoor storage. In contrast, defence technology companies seek flexible R&D and light industrial space, drone production facilities, testing environments and secure R&D offices and hybrid office-lab space.

This divergence reflects the sector's broader shift towards technology-driven activities.

Europe's defence tech ecosystem is structured in three tiers: The UK, Germany, France, and Turkey lead the market, followed by high-tech nations like Sweden, Italy, Spain, Poland, and Norway. Emerging players include Finland, Estonia, and Ukraine. Major regional clusters include London and the South East, Munich and Bavaria, the Paris region, and various hubs in Turkey, all combining talent, investment, research, and defence infrastructure.

European clusters generally fall into three categories capital and technology hubs; industrial and engineering regions: Supporting manufacturing and system integration and military, naval, and logistics nodes.

The defence sector is expanding into new domains like cyber, artificial intelligence, and autonomous systems. Defense technology companies and start-ups are playing an increasingly vital role, supported by public funding and venture capital, creating a more distributed and innovation-led defence ecosystem across Europe.

Commenting on the findings, Karin Witalis, associate director Commercial Real Estate, EMEA Research, Colliers said: “Europe’s defence transformation is reshaping real estate demand, with a shift away from single‑use industrial facilities towards secure, hybrid assets that integrate R&D, office and light industrial space. Occupiers are increasingly prioritising flexible buildings with specialist infrastructure and high security standards, particularly within established innovation clusters that support talent and collaboration”.