Savills estimates extra storage space the size of 400 football pitches will be needed by 2032 as defence spending surge strains logistics capacity
Britain will need to build hundreds of new warehouses over the next seven years to cope with a surge in demand from the defence sector, analysts have warned.
Property consultancy Savills estimates that an extra three million sq m of warehouse space — the equivalent of more than 400 football pitches — will be required by 2032 as the government’s defence spending commitments feed through to manufacturers.
The warning follows Sir Keir Starmer’s pledge this summer to increase the UK’s annual defence budget by around £40 billion by 2035, in what he described as an “era of radical uncertainty”.
Much of this new spending is expected to flow to Britain’s largest defence contractors, including BAE Systems and Rolls-Royce, who will need additional production and storage capacity to fulfil orders both at home and from allies across Europe.
If Savills’ forecasts prove correct, the UK will need to build about 429,000 sq m of new storage capacity each year until 2032. That would be on top of the 650,000 sq m average delivered annually by developers over the past decade, excluding two post-pandemic years of exceptional output.
The surge in demand from the defence industry comes at a time when warehouse rents are already under pressure. Prime rents for logistics hubs near the M25 have almost doubled since 2019, climbing from £215 per sq m to £398 per sq m today.
Andrew Blennerhassett, associate director in Savills’ industrial and logistics research team, said: “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. Policymakers will need to ensure land availability keeps pace with the expansion required.”
The pandemic and subsequent supply chain disruption prompted many companies to reshore production and expand domestic storage capacity, adding further strain to the UK logistics market. However, new development has been hampered by rising construction and financing costs.
Warehouse developers and landlords are already positioning themselves to benefit from the defence spending drive. 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 to capture new opportunities.
Andrew Coombs, chief executive of Sirius and a former Grenadier Guards officer, said: “Defence has the potential to become a major growth sector and driver of demand for warehouse and manufacturing space, where the rent is ultimately government derived.”
Analysts warn that if land availability and planning approvals fail to keep up, the combination of e-commerce demand, reshoring strategies and defence spending could push logistics rents even higher, adding to costs across multiple industries.
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