Savills is constantly reviewing which business sectors could be set to expand. A current feature of the Greater London and South East office market is the variety of businesses which are actively taking space. Manufacturing and industry occupiers have been the most active in the previous two years, accounting for 32% and 27% of take-up, respectively, which locally comprise a broad range of different companies, ranging from pharmaceutical, aerospace & defence, fast moving consumer goods (FMCG), automotive and manufacturing. The breadth of companies active within the market is positive for the region, with no over reliance on the performance of just one business type.

Growth of the aerospace & defence sector

Aerospace & defence is a sub-sector that is becoming more active across the region and the broader structural drivers behind its expansion are set to continue in the short to medium term. The UK Government has recently committed to increasing defence spending to 2.5% of GDP by 2027 and has indicated plans to increase spending to 3% in the next parliament. Defence industry body ADS estimates that 69% of turnover from UK defence companies is derived from the Ministry of Defence (MoD), highlighting the importance of the increase in expenditure from the MoD in supporting the growth of the industry.  

These structural drivers are being recognised in the financial markets with valuations of European listed aerospace and defence companies surging in recent months. According to Morningstar, defence themed funds were the only thematic funds to receive net inflows in the first half of the year.

Spending and regional impact

The South East has previously seen spending by the MoD with £7.1 billion being allocated to companies located in the area during 2023 and 2024, the highest amongst all UK regions. Seven of the top 10 defence companies which received the highest quantum of funding from the MoD in 2023/2024 have a presence across the South East market.

The rise of ‘defence tech’ in the South East

‘Defence tech’ is also set to benefit from the increase in funding. According to Beauhurst, the South East dominates the ‘defence tech’ landscape: the region accounts for 93% of turnover from this sector and is home to the top five UK defence tech occupiers.  

Landlords across the South East are well placed to accommodate the expansion of aerospace & defence. The broader defence supply chain network is also likely to expand, with over 1,000 defence companies located in the South East. The scale of global collaboration across the sector is notable, exemplified by the Global Combat Air Programme Treaty, an initiative launched between the UK, Japan and Italy, to develop the next generation fighter aircraft by 2035. It’s estimated that 9,000 people are working on the programme across 1,000 suppliers, demonstrating the depth of the supply chain network in operation. The headquarters of this collaborative partnership signed to open a new office in the region totalling 160,000 sq ft in H1 2025, demonstrating that this trend is starting to materialise.

Market resilience and outlook

The resilience of the Greater London & South East office market was highlighted by the take-up recorded in the first three quarters of 2025 being 2% above the five-year average. H1 2025 also saw a 9% increase on H1 2024, 15% above the five-year average. Supply in the region is currently at its lowest level , which will help support continued rental growth across the market. These market dynamics, alongside the presence of growth sectors based in the market such as the aerospace and defence industry, make the market an attractive proposition for both investors and developers.  Furthermore, aerospace and defence occupiers have historically preferred out-of-town locations, with security and parking, key considerations for this occupier type. This trend contrasts with the broader urbanisation of demand, and can support business park take-up across the region.

Further information

Contact Simon Preece or Andrew Willcock 

Please find our defence logistics 2025 article here.