Reshoring, automation, sustainability and space expansion are expected to drive commercial real estate trends within the aerospace and defense industry this year. The sector is prioritizing high-tech, secure, and sustainable facilities that offer access to talent as well as adequate and predictable power, according to a Cresa report on A&D industry trends.
Defense spending has been on the rise for the past several years, and the space industry has been rapidly evolving and expanding since the creation of the Space Force in 2019 as well as the privatization of space travel. The country has prioritized supply chains during the pandemic and more recent geopolitical tensions, which has created a renewed emphasis on reshoring manufacturing and diversifying suppliers to reduce dependence on foreign companies, said the report. Meanwhile, labor constraints are driving relocation decisions as defense and aerospace companies work to keep up with demand.
Historically, the A&D industry has located manufacturing facilities in California, Florida and Texas, particularly in areas near research centers, military bases and colleges and universities. Existing locations are centralized around large defense contractors like Boeing in Seattle, Lockheed in Dallas and Northrop Grumman in Southern California, along with metros close to Washington D.C., and central Florida near Cape Canaveral. Recently, several metros away from traditional hubs have experienced significant A&D move-ins, including Tucson, Phoenix, Baltimore, and Indianapolis. These locations provide skilled labor, are located near strong supply chains, and offer more affordable real estate options, said Cresa.
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“Access to a skilled labor force is a crucial factor driving site location for companies in the A&D industry,’ said the report. “As industries increasingly rely on specialized skills — such as robotics programming, data analysis, and advanced engineering — companies seek locations where they can easily recruit workers with the necessary expertise. Regions with strong educational institutions, vocational training programs, and established manufacturing clusters tend to attract businesses, as they provide a steady pipeline of qualified talent.”
Broader hybrid work and office downsizing trends that have emerged since the pandemic are driving footprint optimization in the A&D sector, with many companies overseeing massive real estate portfolios that include office campuses, manufacturing plants, research & development facilities and logistics hubs. Companies are re-evaluating non-core office spaces, investing in secure high-tech campuses for sensitive operations and adopting a hub-and-spoke model for less sensitive roles. In addition, the flight to quality trend in CRE applies to the A&D sector, as many companies are choosing to leave dated and inefficient facilities in favor of modern and secure properties. In addition, manufacturers are increasingly seeking locations that can support high energy consumption, as many advanced manufacturing processes require substantial electricity for operations, especially in advanced systems like radar, directed energy weapons, and aerospace simulations, Cresa said.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
