The European defence sector is undergoing a significant transformation, becoming more diversified, innovation-oriented and technologically advanced. This development, supported by defence investments totalling up to €800 billion, is influencing not only the geographic distribution of activities but also the structure of real estate demand across the region. New requirements for industrial and technological infrastructure are increasingly impacting the Czech Republic as well.
In its latest study titled Defence on the Move: How the Strengthening and Transformation of European Armed Forces Is Changing Demand for Real Estate, Colliers identifies a total of 38 key centres in Europe where the defence industry is heavily concentrated. Each is characterised by a specific focus and competencies that influence the selection of locations and tenants’ requirements regarding specific building types and parameters.
Demand for real estate is changing
Europe is undergoing an unprecedented expansion of defence activities, which is increasingly reflected in the structure and nature of commercial real estate. Defence industry sites, which in past decades tended to develop spontaneously on the outskirts of industrial cities, now attract tenants with specific requirements for space, security and technological infrastructure.
According to Colliers experts, there has also been a shift in the very location of these activities – some of them are moving from remote manufacturing sites closer to urban innovation hubs: “There is a shift from single-purpose industrial facilities to secure hybrid buildings that integrate spaces for research and development, offices and light manufacturing. Tenants increasingly prefer flexible buildings with specialised infrastructure and high security standards, particularly within established innovation hubs,” explains Josef Stanko, Director of Market Research at Colliers.
This is also linked to growing demands on buildings’ technical and operational parameters. Security measures, such as controlled access, surveillance and compliance with defence-related regulations, play a key role. Infrastructure capacity is also important, particularly sufficient power supply, logistics facilities and technological equipment. Specific requirements also arise in the area of working with specialised or potentially hazardous materials. Location remains a critical factor, as tenants prioritise access to a skilled workforce and transportation infrastructure.
Investment flows also play a role in the development of these locations. Capital flowing into the defence and defence technology sectors is increasingly concentrated in technologically advanced areas, which further strengthens their importance while also pushing up demand for appropriate real estate infrastructure.
Differing demand
The Colliers study also highlights the differing requirements of the traditional defence industry, and companies focused on defence technologies: “The traditional defence industry continues to require heavy manufacturing plants, large logistics warehouses and outdoor storage areas. In contrast, companies engaged in defence technologies demand flexible spaces for research and development and light manufacturing, testing environments, secure offices and hybrid office-laboratory spaces,” notes Josef Stanko, adding that these differences reflect the entire sector’s technological transformation. This evolution is also evident in the sector’s expansion beyond traditional areas toward technologies such as cybersecurity, artificial intelligence and autonomous systems.
Multi-tiered structure
Colliers has identified a three-tiered structure within the European defence technology ecosystem. The sector is led by the United Kingdom, Germany, France and Turkey, followed by specialised high-tech countries such as Sweden, Italy, Spain, Poland and Norway, and then new players such as Finland, Estonia and Ukraine. At the regional level, the main defence industry centres include London and Southeast England, Munich along with Bavaria, the Paris region, and several centres across Turkey.
Across Europe, these centres can be divided into three basic types: innovation and technology hubs focused on research and development; industrial and engineering regions supporting manufacturing and systems integration; and military, naval and logistics sites linked to operational infrastructure.
The Czech footprint
The defence sector’s transformation is also having an increasingly significant impact on the Czech Republic. The Czech defence industry’s centre of gravity lies primarily in Eastern Bohemia, Moravia and Silesia, where key manufacturers of ground equipment operate, such as Excalibur Army from the CSG Group in Šternberk. The Pardubice Region, meanwhile, serves as a specialised hub for radar and electronic systems and is also home to innovative companies providing strike and drone weapon systems.
However, the defence sector is also expanding into other regions. The most significant investment in the unmanned technology segment is the new Primoco UAV plant in Písek, costing 750 million crowns, with a capacity for building 300 aircraft per year. The growing demand for secure production halls, R&D spaces and testing areas is thus beginning to spread to new regions, but the share of defence companies as part of the demand for industrial space on the open market is negligible.
“Real estate is becoming an integral part of defence transformation – and the ability to offer the right type of space will be a key factor for further growth in many locations,” concludes Josef Stanko.
