Europe's industrial and logistics landscape is undergoing a profound transformation, driven by two long-term structural forces that are set to influence investment decisions, occupier demand and location strategies over the coming years: the expansion of Europe's defence industrial base and the growing presence of Chinese businesses investing directly in European markets. These are not short-term trends. Rising defence requirements are accelerating investment in manufacturing capacity across Europe, while Chinese companies are increasingly moving beyond an export-led model towards establishing production, distribution and logistics operations closer to European customers. For occupiers, investors and developers, these shifts are creating new sources of demand and new opportunities across the industrial and logistics real estate sector.  

Defence
Europe is Expanding its Defence Industrial Base

Growing defence expenditure, increasing order books and policy support for domestic production are driving significant investment across Europe's defence manufacturing sector. Since 2024, nearly 200 new facility investments, plant expansions and manufacturing site openings have been announced across the region. Demand is evolving beyond the expansion of existing facilities and increasingly includes new production sites and the conversion of industrial assets. While Germany, the UK and France remain the largest centres of activity, investment is spreading across Southern Europe and other emerging manufacturing locations. As growth extends beyond prime contractors and Tier 1 suppliers into the broader supply chain, opportunities are emerging for a wide range of industrial assets, including production facilities, assembly space and smaller industrial units.

Chinese Business
Growth From Exporting to Europe to Investing in Europe

Intense competition and overcapacity in the domestic Chinese market are encouraging businesses to pursue growth opportunities abroad. Europe remains a key destination due to its large consumer base, strategic location and ability to support more resilient and localised supply chains. Chinese businesses are increasingly complementing exports with local manufacturing, distribution and logistics operations. This trend is particularly evident in electric vehicles, batteries, renewable energy technologies, e-commerce and logistics. Between 2024 and H1 2026, Chinese occupiers leased more than 2.5 million sqm of logistics and industrial space across Europe, supporting demand for modern, high-quality facilities and contributing to the development of new pan-European distribution networks.

Italy
A Strategic Gateway for Emerging Industrial Demand

Italy stands out as one of the European markets benefiting from both of these structural trends. On the defence side, the country is supported by a well-established and highly specialised manufacturing ecosystem, making it an important contributor to the expansion of Europe's industrial defence capabilities. As investment flows through the supply chain, opportunities are emerging across production, assembly and supporting industrial activities. At the same time, Italy is increasingly attracting interest from Chinese companies seeking to expand their European footprint. Its large domestic market, strategic position in the Mediterranean and role as a gateway to Southern Europe strengthen its attractiveness for manufacturing, logistics and distribution operations. These dynamics coincide with growing logistics demand and reinforce Italy's position as a key industrial and logistics market within the broader European landscape.

Looking Ahead

The expansion of Europe's defence industry and the growth of Chinese investment represent two of the most significant forces shaping the future of industrial and logistics real estate. Understanding where demand will emerge, which locations are best positioned to benefit and how occupier requirements are evolving will be critical for investors, developers and occupiers planning for the next phase of growth.