Some of the contents of this article were originally delivered during our Industrial & Logistics Seminar: ‘From Leadership to Lifecycle’, on 30 June 2026.
A mixed macroeconomic picture and enduring political instability are two of the key factors influencing activity in the industrial and logistics (I&L) sector.
Uncertainty demands agility from I&L asset holders as they identify and pursue growth opportunities. However, recent years have highlighted that organisations with a well-defined strategy can thrive – with the defence sector in particular offering significant potential for expansion.
Pivoting to the defence sector
As explored in our thematic geopolitical report (opens a new window), geopolitical instability has intensified and is exerting a persistent influence on businesses. In response to the changing landscape, the UK Government recently pledged to increase defence spending by an extra £15 billion over the next four years in their defence investment plan (DIP) (opens a new window).
There is a strong and urgent need for the I&L industry to play a role in this transition (opens a new window). Andrew Coombs, CEO, Sirius Real Estate, stated that it is “unavoidable” that the industrial property sector will begin pivoting to the defence industry.
Beyond government initiatives to build the UK’s industrial and defence base, foreign investment is also integral to future expansion. Numerous companies in the UK are already benefitting from demand from foreign nations for armaments and aircraft. For example, Swindon has welcomed multiple organisations specialising (opens a new window) in the construction of drones and autonomous weaponry, while a firm producing unique, hybrid air vehicles (opens a new window) set up a large factory at Doncaster in 2024.
Moving at pace
For I&L businesses hoping to capitalise on this growing trend, “speed to market is vital”, according to Coombs. Organisations able to move at pace to help clients find industrial space and kit it out will give themselves a huge advantage against competitors when engaging with defence-based tenants, Coombs stated.
And, according to Coombs, the speed to which this transition is already occurring in Germany, for example, is “palpable”, as the urgency to industrialise and boost sovereign defence capabilities strengthens. This is underlined by the German Government announcing in July 2026 it intends to borrow €800 billion (opens a new window) for rearmament.
Growth in defence and industrialisation is similar in the UK. In 2025, defence manufacturers and their supply chains’ I&L leasing accounted for nearly double (opens a new window) the average per year between 2015 and 2024.
Refurbing or redeveloping in the age of automation
To attract tenants, I&L property owners may be considering whether to refurbish current stock, or demolish existing structures and rebuild from scratch. This decision is primarily influenced by economic pressures, ESG requirements, and planning considerations. However, the ability to add automation and robotic capabilities into assets is becoming more important.
To benefit from this trend and support the AI transformation, access to reliable and robust power supplies is critical. Furthermore, developers must consider how their warehousing supports the introduction of intelligent machines, and further evolved systems in the future that can conduct more sophisticated work. Lighting, connectivity, ventilation, and separation of robotics from human employees are key considerations for safely implementing robotics at I&L facilities.
The value of sustainable construction materials
I&L tenants have displayed an increased demand for BREEAM rated assets that utilise more sustainable construction materials. Over time, gradual development has resulted in sustainable material performance mirroring that of traditional construction supplies.
Furthermore, adoption of these materials – such as recycled concrete – helps achieve significant cost savings. However, it is crucial design and procurement teams are able to order and access materials in good time to ensure the construction process isn’t impeded. Locking in prices at the beginning of projects also helps prevent inflation eroding profitability.
Green steelmaking can also boost ESG efforts. Port Talbot Steelworks' £1.25 billion electric arc furnace is a key example of UK industry achieving significant reductions (opens a new window) in greenhouse gas emissions. Beyond ESG requirements, UK green steel also eliminates potential contractor reliance on foreign imports, which can be subject to tariffs that minimise project profitability.
Recognition of the diverse role of industrial open storage (IOS)
Historically fragmented and overlooked, the versatility of IOS assets is helping to attract capital to the I&L sector. Despite lingering negative perceptions over lack of tax revenue and job creation, IOS developments are simultaneously experiencing both a decline in supply and growth in demand.
According to Morgan Baker, Co-Founder, Modal, IOS sites have a “broad remit of end users”. But to make use of IOS assets, and increase ‘stickiness’ with tenants, landlords should gain a deeper understanding of client needs by focusing on what their clients’ customers want, too. This enables I&L organisations to move beyond being a supplier, and instead become a strategic partner.
For more information, reach out to a member of our team.
Further insights are available via our Industrial & Logistics (opens a new window) page.
