Aerospace and Defense: Understanding the Impact on Commercial Real Estate

AEROSPACE & DEFENSE MANUFACTURERS NAVIGATE CHANGING LANDSCAPES

The Aerospace & Defense (A&D) manufacturing industry has seen shifting priorities as companies look to keep up with quickly advancing technology, supply chain challenges and the priorities of a new government administration. The following are underlying themes that are impacting decisions within these industries:

• Defense spending has grown steadily over the past several years due to geopolitical tensions, modernization efforts, and an emphasis placed on investment on domestic manufacturers and suppliers.

• The growth of the space industry has been spurred by the creation of the US Space Force (2019) and the privatization of space travel. Companies have revolutionized the industry with reusable rockets and more cost-efficient space travel. NASA and the Department of Defense are increasingly outsourcing space operations to private companies.

• Supply chains have been prioritized due to disruptions starting with the pandemic and rising geopolitical tensions. The result has been a renewed focus on reshoring manufacturing and diversifying suppliers to reduce reliance on foreign companies.

• Labor constraints are prioritizing decision-making for companies as finding enough skilled-labor to support growing demand, particularly with many qualified workers approaching retirement age, requires strategic thinking when considering location requirements.

• Mergers & Acquisitions (M&A) in the A&D industry in the form of mega mergers have taken place in the past several years. Organizations undergoing M&A have an opportunity to think strategically about their real estate footprint and economies
  of scale.

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