Britain will need to construct vast amounts of new warehouse space over the next decade to keep pace with soaring defence spending, according to analysts at property consultancy Savills.
The firm estimates that an additional three million square metres of logistics capacity — equivalent to more than 400 football pitches — will be required by 2032 as government commitments to military investment feed through to manufacturers and contractors. That equates to roughly 429,000 square metres of new warehouse space annually for the next seven years, a sharp increase on the average 650,000 square metres delivered by developers each year over the past decade.
The forecast comes in the wake of Prime Minister Sir Keir Starmer’s pledge to raise annual defence spending by around £40 billion by 2035, describing the UK as entering an “era of radical uncertainty”. Much of the new funding is expected to flow to Britain’s largest defence contractors, including BAE Systems and Rolls-Royce, which will need significant new storage and production facilities to fulfil orders for the UK military and European allies.
The anticipated demand for warehouse space adds pressure to a logistics sector already grappling with high rents and limited land availability. Prime rents for hubs near London’s M25 corridor have almost doubled since 2019, rising from £215 per square metre to £398 per square metre.
“If there is a lesson to be learnt from the pandemic, it is that well-functioning, diversified and robust national logistics ecosystems are vital to a functioning manufacturing industry – and defence is no exception,” said Andrew Blennerhassett, associate director at Savills’ industrial and logistics research team. “Policymakers will need to ensure land availability keeps pace with the expansion required.”
The pandemic and subsequent supply chain disruptions prompted many firms to reshore production and expand domestic storage facilities, placing further strain on the UK logistics market. Yet new development has been slowed by high construction and financing costs, raising concerns about whether supply can meet the looming surge in demand.
Developers and landlords are already positioning to benefit from the shift. Sirius Real Estate, which owns more than £2 billion of warehouse assets in the UK and Germany, has appointed a former British Army major general as a strategic adviser. Chief executive Andrew Coombs, himself a former Grenadier Guards officer, said defence could become “a major growth sector and driver of demand for warehouse and manufacturing space, where the rent is ultimately government derived.”
Analysts warn that without sufficient land releases and planning approvals, the combined pressures of e-commerce, reshoring strategies and defence expansion could send logistics rents even higher, impacting costs across multiple industries.
