Britain is rearming, and the private sector is moving fast. With the government committed to raising defence spending to 3.5% of GDP by 2035, the defence budget on course to top £73.5 billion by 2028/29, and companies like Anduril, who closed a $5 billion Series H raise in May at a $61 billion valuation, already committing to UK manufacturing, one question is starting to cut through: what kind of real estate will all these companies actually need?
The geopolitical order has shifted. Russia’s invasion of Ukraine, NATO’s new 5% of GDP aspiration agreed at The Hague in 2025, and a recalibrated transatlantic relationship have together triggered the most significant re-arming of Western nations in a generation. According to SIPRI, global defence spending hit $2.46 trillion in 2024, a real-terms increase of 7.4%. Defence News research found that defence technology startups raised a record $49.1 billion in 2025, almost double the prior year. In Europe alone, deal count for defence tech grew 67% year-on-year. Helsing, Europe’s leading defence AI company, is now in talks for a $1.2 billion round at an $18 billion valuation, a raise described by the Financial Times as oversubscribed multiple times.
The numbers are becoming names. Before 2026, the UK had no defence tech unicorns; within the first three months of this year it is on course to have three, with Tekever, UForce and Cambridge Aerospace all crossing or approaching the billion-dollar mark. The question of physical space is no longer academic.
The nature of modern defence technology is important here. This is not the defence of old, with vast factories turning out armoured vehicles and munitions behind high-security perimeters. The new cohort, from drone manufacturers and autonomous systems developers to AI-enabled sensing businesses and advanced materials firms, clusters around talent, needs flexible space for both R&D and early-stage manufacturing scale-up, and cannot be accommodated by either a traditional factory or a Grade A science campus. The European Commission’s Defence Industry Transformation Roadmap, published in November 2025, puts it plainly: new defence companies “would benefit from agile and flexible approaches to manufacturing” and are held back by the need to commit to expensive, purpose-built facilities before contracts are secured. That is precisely the problem mid-tech solves.
This is why a conversation DTRE started 2.5 years ago feels more urgent than ever. Our ‘Rise of Mid-Tech’ report identified a structural gap in the UK’s commercial real estate market: between Grade A laboratory buildings commanding £65-£85 per sq ft in Cambridge and Oxford, and the vanilla industrial unit, there existed a largely unmet category. Mid-tech: an industrial shell with adequate height and loading, Cat A mezzanine office space covering at least 25% of the footprint, full-height sections for heavy equipment, and the amenity knowledge workers expect. Shell and core, at around £30 per sq ft. Not a compromise. A proposition.
That proposition has found a powerful new advocate in the defence technology sector. The specification requirements of a drone manufacturer scaling from prototype to production are almost identical to those of a life sciences business outgrowing its incubator. They need height. They need loading. They need to run power-hungry equipment. They cannot wait two years for a bespoke building to be delivered. The Financial Times has reported that weapons factories across Europe are already expanding at nearly three times the peacetime rate, with some 7 million square metres of new industrial development recorded since 2022. That is the direction of travel, and it is accelerating.
Location logic mirrors that of life sciences. The Golden Triangle remains the gravitational centre, but the real opportunity sits on its edges. The fringes of Harwell, the Cambridge arc, the M40 corridor: these are precisely where developers can acquire land at a cost that makes a £30 per sq ft shell and core viable, while proximity to research institutions delivers the clustering effect these occupiers need. It is not a coincidence that Anduril and Tekever are already gravitating to exactly these locations.
The thesis has not changed. What has changed is the urgency and the breadth of the demand signal. Mid-tech is now being validated by a defence technology sector that is flush with capital, under political pressure to manufacture on home soil, and deeply unsuited to either a conventional office park or a full-specification science campus. Our own pipeline bears it out: since the start of this year we have put under offer or transacted on 173,000 sq ft of space to defence technology occupiers. Two years ago, those conversations barely existed.
Some developers have been slow to recognise the full range of occupiers that mid-tech can serve. Defence technology changes that calculus significantly. With IMARC Group projecting the UK’s aerospace and defence market will nearly double from $28.7 billion in 2024 to $58.3 billion by 2033, the pipeline of companies requiring exactly this kind of space, industrial in structure, intelligent in finish, located within reach of the country’s key research clusters, is only going to grow. The goal is open. It has been open for 2.5 years. Developers just need to take the shot.
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