Europe’s industrial and logistics landscape is being reshaped by two powerful forces: the rapid expansion of the defence industrial base and the growing presence of Chinese businesses investing directly in European markets.
Both are structural shifts, not short-term trends. Rising defence requirements are driving manufacturers to increase production capacity, while competitive domestic pressures are pushing Chinese businesses to establish manufacturing, distribution and logistics operations closer to European customers. Together, they are creating new sources of demand and new opportunities for industrial real estate.
Why does this matter now?
The forces highlighted in our previous Strategic Sector Signals research have intensified.
European governments are spending more on defence and placing greater emphasis on strengthening domestic production capacity. At the same time, Chinese manufacturers, retailers and logistics businesses are moving beyond exporting into Europe towards establishing a permanent operational presence within the region.
For occupiers, landlords, developers and investors, that means demand is evolving in both scale and type. Specialist production facilities will be part of the story, but so too will conventional industrial buildings, modern logistics facilities, converted legacy assets and, increasingly, smaller flexible units.
DEFENCE
Europe is scaling its defence industrial base
Growing defence spending, expanding order books and policy support for European production are accelerating investment in manufacturing capacity. Cushman & Wakefield has tracked nearly 200 new facility investments and openings been announced across Europe since the start of 2024, led to date largely by Prime and Tier 1 manufacturers.
Download the report to read more.What is changing?
Demand is moving beyond investment in existing production sites into new facilities and converted industrial assets. The UK, Germany and France remain the largest centres of activity, but investment is broadening across Southern Europe, the Nordics, Benelux and Central and Eastern Europe. Requirements for newly created facilities have most frequently centred on the 10,000–25,000 sqm size band.
Where is the opportunity?
Not every defence requirement needs a highly specialised building. Many conventional industrial assets can accommodate defence occupiers with appropriate security, safety and specification interventions. And as growth filters from Primes and Tier 1 manufacturers through the wider supply chain, Tier 2, 3 and 4 suppliers could create the next wave of demand, particularly for smaller industrial units. For developers and investors, that creates opportunities to prepare sites and buildings as defence-ready space and engage early with occupiers whose expansion requirements are likely to be sustained rather than temporary.
CHINESE BUSINESS GROWTH
From exporting to Europe to investing in Europe
Intense competition and domestic overcapacity—often described as involution—are putting pressure on margins and encouraging Chinese businesses to seek growth overseas. Europe’s large consumer base is a major target: 78% of Chinese businesses surveyed cited access to new customers and markets as the primary driver of European investment.
Download the report to read more.What is changing?
Chinese businesses are increasingly moving from an export-led model towards local production, inventory and distribution. This is particularly visible in EV and battery manufacturing, clean energy technology, and ecommerce, where localisation can improve market access, supply-chain resilience and proximity to customers. The impact on real estate is already visible. Chinese businesses leased more than 2.5 million sqm of European logistics and industrial space between 2024 and H1 2026, with 10,000–25,000 sqm the most frequently leased unit size as well as significant demand for larger buildings.
Where is the opportunity?
Demand is focusing on major consumer markets including Germany, the UK, France, Spain and Italy, alongside lower-cost production markets such as Hungary and Poland. Logistics providers are playing an increasingly important role as Chinese retailers build European fulfilment networks, while the majority of space taken to date has been high-quality, modern stock. Speed will matter. Chinese businesses often want to become operational quickly, yet regulatory compliance and finding reliable local partners are among their biggest challenges. This creates an important role for European real estate partners that can combine local market knowledge, suitable space and execution capability.
Turn insight into action
Defence expansion and Chinese investment are creating new sources of industrial and logistics real estate demand, but capturing the opportunity requires understanding where demand will emerge, what occupiers need and how quickly requirements can be delivered.
Whether you are planning expansion, assessing future tenant demand or considering how existing assets could be repositioned, our Logistics & Industrial experts can help translate these trends into actionable real estate strategies.
Speak to our experts
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Key Questions
Two structural forces are creating new demand: the expansion of Europe’s defence manufacturing base and increased investment by Chinese businesses in European production, logistics and distribution. Both are expected to support sustained demand across a range of industrial asset types.
Higher defence expenditure and growing manufacturer order books are driving investment in additional production capacity. Defence companies are expanding existing sites, developing new facilities and taking existing industrial buildings, creating opportunities for landlords, developers and investors across European markets.
Defence occupiers do not always require highly bespoke real estate. Many requirements can be accommodated in conventional industrial buildings, although some facilities need enhanced security, safety measures or modifications. Newly created defence facilities have most frequently been in the 10,000–25,000 sqm size range.
The UK, Germany and France have attracted the greatest volume of defence manufacturing investment, with significant activity also recorded in Spain, Italy, Sweden, Türkiye, Belgium, the Netherlands and Central and Eastern Europe, particularly Poland.
Chinese companies are looking to Europe for growth as slowing domestic demand and overcapacity put pressure on profitability at home. Access to European customers is the primary motivation: 78% of Chinese businesses surveyed by Cushman & Wakefield Research cited access to new customers and markets as a key driver of investment in Europe.
Key areas include electric vehicles and battery production, clean energy technology, ecommerce and logistics. Chinese businesses are increasingly establishing European manufacturing and distribution operations rather than relying solely on exports from China.
Chinese businesses leased more than 2.5 million sqm of logistics and industrial space between 2024 and H1 2026 across the European markets analysed. The most frequently leased unit size has been 10,000–25,000 sqm, particularly among logistics providers. Demand has been high for larger units of 25,000-40,000 sqm and of more than 40,000 sqm, particularly amongst retailers.
Demand is concentrated in major European consumer markets including Germany, the UK, France, Spain and Italy, alongside gateway and lower-cost production locations such as the Netherlands, Hungary and Poland. Market size and customer demand are among the most important location-selection factors.
Opportunities include repositioning existing industrial assets, delivering new or adapted facilities, providing flexible lease structures and preparing for future demand from smaller defence suppliers and the wider Chinese business ecosystem. Early engagement with growing occupiers can help landlords and developers secure emerging demand.
Understanding where these businesses are expanding, the type of space they require and the different regulatory and transaction timelines involved can help stakeholders make better real estate decisions. Cushman & Wakefield can support occupiers with European expansion and location strategy, and help landlords, developers and investors identify, position and deliver assets for emerging demand.
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