UK Defence Budget Uplift and Industrial Demand

The UK government has already committed to lift spending from 2.3% of GDP, roughly £54–59 billion, to 2.5% by 2027, with an expressed ambition to aim towards 3.0% in the following parliament. If longer-term policy led to spending of 3.5% of GDP in the mid-2030s, this could add £25–35 billion per year in additional procurement.

Historical evidence suggests that each £1 billion of extra defence spend supports thousands of jobs across manufacturing and logistics, implying tens of thousands of new roles nationwide. This, in turn, translates directly into higher demand for factories, warehouses and secure storage. The UK is shifting towards an “always-on” model of production and stockpiling, requiring a broad base of industrial facilities. Transactions in recent years have spanned from 100,000-square-foot distribution warehouses to factory complexes of more than 120 acres. While some projects will be on a large scale, the majority of demand is expected in mid-box units and multi-let industrial parks as hundreds of SMEs integrate into the defence supply chain.

Newmark Research has modelled the likely scale of the Industrial demand with the rising budgets. The analysis progresses in three stages: projecting the uplift in budgets, converting that uplift into employment and then translating employment into space requirements. Assuming GDP grows modestly and defence spending rises to 3–3.5% of GDP by the early 2030s, additional procurement could reach £20–30 billion annually. Historically, each £1 million of UK defence procurement has supported between six and ten jobs, both directly and indirectly. This implies that an extra £20 billion would equate to roughly 120,000–200,000 supported roles with a large proportion being new manufacturing and logistics positions along with research and development.

According to official UK government standards, manufacturing facilities typically allocate about 388 square feet per employee, while warehousing operations generally need around 750 square feet per worker. Based on these figures, the anticipated new positions in manufacturing production could generate demand for roughly 20.3 million square feet of space, supplemented by an additional 13.2 million square feet for logistics roles. In total, this could result in a requirement for at least 32–35 million square feet of extra industrial and storage capacity. If this level is attained by 2033, it would represent an annual minimum demand of approximately 4.7 million square feet.

A distinct component of this expansion is munitions. The government has pledged £1.5 billion for six new energetics factories, expected to create around 1,800 jobs. If each plant were to occupy between 200,000 and 300,000 square feet, the programme would generate 1.5–2.0 million square feet of new factory space, with additional ancillary buildings on top. Higher stockpiling requirements also imply expanded storage capacity. Existing depots such as DM Kineton in Warwickshire and DM Longtown in Cumbria already cover thousands of acres and hold much of the UK’s ammunition, but further secure warehouses and extensions to these sites are likely, meaning munitions-related demand could account for several million square feet of highly specialised space.

Aerospace will form another critical strand of demand, particularly around airports and airfields. Aircraft storage and maintenance is partly carried out by the private sector at non-military sites such as Cambridge Airport, home to Marshall Aerospace, Teesside International Airport and Bournemouth Airport. These facilities will require additional hangars, often in the range of 50,000–100,000 square feet, alongside dedicated (often bonded) storage for parts and equipment. The Ministry of Defence’s reliance on private sector partners for supply chain distribution further reinforces the need for logistics hubs on or near airfields. In addition, research and testing of next-generation aerospace technologies, from advanced drones and hypersonics to sustainable aviation, will demand secure, high-tech facilities with direct runway access.

Geographically, demand will cluster around established defence and aerospace hubs. In the Midlands, growth is expected around Telford, Birmingham, Warwickshire and Derby, supported by the logistics role of East Midlands Airport. Southern England will continue to strengthen around the Farnborough–Aldershot corridor for aerospace and the Portsmouth–Gosport axis for naval logistics. In the North West, Lancashire and Manchester will benefit from aerospace and supply chain distribution, while in the South West, Plymouth and Filton will be important centres for submarine and aerospace activities. Scotland will also see continued demand, with Glasgow and Rosyth contributing to shipbuilding and cyber capabilities, and Prestwick Airport serving aerospace manufacturing and storage.

Across these regions, SMEs are likely to play a central role. Many will occupy units of 5,000–50,000 square feet within multi-let industrial estates, often positioned near prime contractors or transport infrastructure. These estates are particularly well suited to defence uses, as they can be adapted with reinforced floors, blast-safe areas or cleanrooms, and offer the flexibility to scale up production. Unlike e-commerce occupiers, defence tenants prioritise security, specialisation and proximity to established clusters.

In conclusion, Newmark Research indicates that higher UK defence spending has the potential to catalyse a new wave of industrial activity. Over the next decade, defence-linked demand will see at least 33.5 million square feet of additional warehouse and manufacturing space. The Midlands, North West and South will see the largest concentration, with existing Ministry of Defence sites such as Kineton, Gosport and Longtown likely to expand further. For developers and investors, the opportunity lies in securing land early and delivering flexible, secure estates that can accommodate the evolving requirements of the defence supply chain.