By Liza Helps, Property Editor, Logistics Matters

THE NEWS, while preceding yesterday’s resignations by Defence Minister John Healey and Armed Forces minister Al Carns, amplifies the uncertainty caused by the Government’s failure to follow up on last year’s Strategic Defence Review with the prompt publication of a Defence Investment Plan setting out how defence spending would be funded.

The Ministry of Defence was believed to be looking for some £28 billion in order to meet the Government’s pledge to NATO to increase the UK’s defence target to 5% of the UK’s GDP on national security by 2035. News outlets have reported that instead the Government  was looking to announce just £13.5 billion in extra funding over the next four years – triggering the resignations and a crisis at Number 10.

In 2025, research by CoStar showed that nearly 4 million ft2 was taken up by firms whose core business is defence or for which it is a significant revenue stream. That figure is more than double both the previous year’s total and the decade average before Russia’s invasion of Ukraine.

Since the conflict began in 2022, defence-related industrial take-up has climbed more than 70% compared with the previous four years, in tandem with a steady increase in Ministry of Defence spending on industry and commerce, which has grown by an average of 13% annually over the same period.

Should the UK Government decide to meet its NATO pledge and fully fund its own Strategic Defence Review, a research report by Savills earlier this year indicated that there would need to be an increase of employment in the order of 16,970 new logistics jobs and 45,160 manufacturing jobs.

Savills has modelled job creation numbers based on the increase in defence spending, before relating this to space requirements using standard usage densities. The firm has calculated that this could lead to additional demand of up to 32.3 million ft2 in warehouse space in the UK alone over seven years, equating to annual average take-up of 4.5 million ft2.

The Arc 500 scheme totals 497,201 ft2 and was speculatively built in 2023/24. It is cross docked with two 50m yards and 360 circulation and was built on the former Ark Royal site in Birkenhead. It sits in the Liverpool Freeport where occupiers can, subject to status, secure tax and customs benefits up to £15 million.

Joint agents for the Arc 500 development are Colliers and CPP.