Defence and energy paving the way for a ‘new’ logistics environment
Defence spending is on the rise and countries are refocusing on domestic energy supply to allay energy security concerns. How will these trends impact investment into the logistics sector? PATRIZIA Co-Head of Investment Management and Head of Investment Management Logistics Emile Poort shares his thoughts.
Emile Poort,
PATRIZIA Head of Investment Management Logistics
It’s the question on everybody’s lips: what impact will increased defence spending have on logistics? In a geopolitical landscape in which tensions are simmering and sporadically spilling over, nations have prioritised defence spending and revisited domestic energy supply chains. Last June, in response to pressure applied by US President Donald Trump, NATO member nations committed to increasing defence spending from 2% of GDP to as much as 5%.
So, from a logistics investment perspective, is this a good thing? And is it the shot in the arm the sector needed after a slowdown in activity in the past few years?
Out with the old…
To answer the second question, it’s necessary to assess where the sector is right now.
Industrial was the star performer over the previous cycle in Europe, but demand in the continent has weakened in the last few years. Future market rental growth broadly matches inflation now, though NOI growth expectations are higher due to reversionary potential in many markets and across many assets. In line with this drop-off in demand in Europe’s top cities is the drop-off in the share of e-commerce sales across all retail sales in the UK as our graph below highlights.
Despite this, investment volumes remain above long-term averages, signalling sustained investor conviction in logistics assets (22% of total real estate capital in 2025 vs. 13% in 2018).
The tailwinds supporting logistics – e-commerce, urbanisation and the return of manufacturing – are structural, while the sector offers attractive pricing (average prime yield of around 5% is c. 100 basis points above core residential markets) and strong asset management value creation opportunities.
And this positive picture offers a foundation for growth and optimism in the sector as opportunities arise from defence spending increases and a renewed focus on energy storage and delivery.
… And in with the new
A more stable macroeconomic picture in 2026 is the forecast and environment in which we envisage our logistics strategies moving forward, but that hasn’t stopped us also scenario-planning for a recession as a Plan B.
In both cases, the logistics sector – or ‘new’ logistics as we refer to it – emerges as a strong bet, supported by Europe’s defence imperatives.
The tailwinds are blowing favourably towards a defence manufacturing revival as the below explainer demonstrates.
Riding the DUEL megatrends
And planning to create value in this ‘new’ logistics sector aligns perfectly with PATRIZIA’s DUEL megatrend investment strategy; namely, digitalisation, urbanisation, energy transition and modern living.
In terms of digitalisation, defence investment requires logistics assets running efficiently through digital automation assisted by AI with operations being data-driven. Then there is the technology aspect of defence and energy assets themselves, while secure supply chains are essential and supported by blockchain.
As an example, think of DHL’s use of AI-driven predictive analytics and autonomous forklifts in German distribution centres to optimise military and industrial supply chains.
With urbanisation, last-mile logistics hubs will increasingly be needed to support defence-related manufacturing and energy distribution. An example of this is Amazon’s urban micro-fulfilment centres in Paris and Milan facilitating rapid delivery and strategic stockpiling.
The energy transition towards renewables creates demand for logistics hubs near energy corridors, such as hydrogen infrastructure projects in Northern Germany and the Netherlands supporting green energy distribution.
And as for modern living, the growth in defence- and energy-driven logistics assets needs to work in tandem with proximity to a resident employee base. This in itself can also shape living solutions as seen by Prologis developing logistics parks with co-living spaces near Warsaw to address labour shortages.
Underpinning all of this is sustainability, with occupiers, in Europe at least, choosing assets which accord with their own green goals. A pivot to a more defence-oriented logistics market has stoked fears that ESG may be deprioritised, but we don’t see this shift happening at PATRIZIA.
Where is set to benefit?
While the focus on defence and energy in the sector will be wide-ranging, there are markets which appear set to benefit most in this new logistics landscape.
From a defence point of view, Eastern Europe and NATO border countries will require logistics assets near military bases and transport corridors. An example of the kind of assets desired are smart warehouses in Poland, which are equipped with Internet of Things (IoT) sensors for real-time inventory tracking.
Defence-related manufacturing will see an uptick in activity and cities with strong industrial bases will be sought-after locations. Munich, for example, could be one city explored in this regard. Currently, its aerospace supply chain is supported by robotics-enabled warehouses, and further such investment could find its way into the city.
Energy corridors and ports will be desirable locations from an energy security point of view. Strategic hubs for liquefied natural gas (LNG) and renewable energy sources will require advanced storage and distribution facilities. Rotterdam falls into this category, with LNG terminals in the city already using automated scheduling and blockchain for secure energy flows.
PATRIZIA’s approach to new logistics
A more selective approach is needed with higher vacancy rates than seen in the sector’s boom in the early 2020s (2-300 basis points higher).
The sector is more than just ‘big boxes’ and while that market is experiencing an increase in supply, we see opportunities in the more supply-constrained urban segments relating to production and distribution, such as last mile and multi-let industrial.
The way we segment this is through creating a distinction between consumer-oriented goals and production-oriented goals, as well as strategies for global supply chains versus local ecosystem enablement.
We have translated the (re)manufacturing, city logistics, (inter)national distribution, and materials and energy clusters/quadrants into investment themes, each driven by its own tailwinds. In addition, we have identified target markets (cities, areas, regions) and risk spectrums (core/core+, value add) for these themes, ensuring the right alignment between themes and risk/return profiles for our clients.
This will enable us to be nimble in the market and pool resources appropriate to the opportunity/need.
Our strategy is predicated on a digital-first approach, with energy-efficiency retrofits a key part of our asset management plan and mixed-use logistics parks, incorporating residential, increasingly in our thinking.
We will focus on ESG-compliant, power-secure assets in core and nearshoring markets and consider speculative development in undersupplied urban areas, while ensuring future-proof digitally enhanced facilities with renewable energy integration.
Using our experience from over 30 years in the sector, with over EUR 6 billion logistics assets in our portfolio and an average of over EUR 1 billion transacted in the sector between 2020 and 2024, we have a clear view of where the value within the sector will be and how to manage these assets in future. Moving forward, we see opportunities at the intersection of real estate and infrastructure - or RE-Infra as we call it at PATRIZIA - where the skills and expertise we have across the two asset classes can be blended to find the best value creation opportunities in the sector moving forwards.
With this focus and our flexibility and ability to manage investments on behalf of our clients across the four quadrants, we see a strong 2026 for value creation in this new logistics environment.
PORTFOLIO INSIGHTS
Ports, did you say?
Rotterdam is one port city already being used as a domestic energy corridor in the Netherlands. The Port of Rotterdam is consistently the largest port in Europe by cargo volume, serving as a crucial gateway for European trade and logistics with its vast size, deep-water access, and extensive multimodal connections to the continent's industrial heartlands.
It is also where Maasvlakte – PATRIZIA’s 210,000 sq m logistics asset – is based. 120,000 sq m of Maasvlakte’s rooftop has been fitted with solar PV panels, making it one of the largest rooftop solar installations in Europe, with the capacity to meet the annual energy needs of 8,000 homes.
Multi-let mainstay in the UK
PATRIZIA has managed Westcott Venture Park in Aylesbury, UK, for more than 30 years, refining its asset management strategies along the way to create value in different cycles. The 650-acre multi-let industrial asset is home to existing and growing defence companies, sitting in the (re)manufacturing investment theme.
The asset is strategically important for the UK, supporting the local economy and hosting knowledge clusters in satellite and drone technology, as well as being home to a significant space industry hub.
