- 3 min read
- 16.04.2026
- by Aissatou Frisch-Baldé
Defence-Tech in Berlin
Why the capital appears on the defense industry map.
Large manufacturing facilities and industrial supply chains in the defense industry have traditionally been located in southern Germany. Over the decades, high-performing industrial ecosystems with specialized skilled workers and production capacities have developed there. The capital, on the other hand, was regarded as a political hub, a startup hub, and a center for services.
However, this division of roles is beginning to shift.
The defense industry is becoming more digital
This shift is driven by technological advancements in modern defense systems. Today, an increasing share of value creation no longer stems from heavy manufacturing, but rather from software development, sensor technology, data processing, and system integration. Military systems are increasingly functioning as complex digital platforms that collect and analyze data, network sensors, and coordinate various components.
This also shifts the logic behind location choices. For technology-oriented companies, different factors are decisive than for traditional defense manufacturers. The focus is on qualified skilled workers, research networks, access to capital, and proximity to political decision-making structures.
Why Berlin fits into this picture
This is precisely where Berlin has structural advantages. The capital boasts a large talent pool in the technology and software sectors. International specialists are easier to recruit here than in many traditional industrial regions.
Added to this is a dense research landscape featuring universities and scientific institutions. At the same time, Berlin has developed into one of Europe’s most important locations for technology-oriented startups.
The city also plays a central role on the capital side. Venture capital investments in Berlin-based startups remain at the highest level in Germany. This creates an environment for technology-oriented companies where financing, research, and talent are closely interconnected geographically.
Another factor is proximity to political institutions and procurement agencies. In an industry heavily shaped by government regulations, this is a clear locational advantage.
Capital Discovers Defense Tech
The capital market is also responding. Investments in European defense, security, and resilience startups reached a new high in 2024. At the same time, programs such as the “NATO Innovation Fund” and the “European Defense Fund” are providing billions of euros for security-related research and innovation.
A large portion of these funds is flowing into dual-use technologies that can be utilized for both military and civilian purposes. These include, for example, sensor systems and autonomous applications. Technological expertise is thus becoming increasingly important for the industry.
The geopolitical situation reinforces the trend
At the same time, Europe’s security landscape has shifted noticeably. Germany’s defense budget is rising significantly: from around 52 billion euros in 2024 to approximately 108 billion euros in 2026. Added to this is a special fund of 100 billion euros for the modernization of the Bundeswehr.
At the same time, funding programs are being expanded, and technological capabilities are being placed more firmly at the center of security strategies. This development is not a short-term effect but part of a long-term strategic reorientation.
Additional demand in the Berlin office market
This creates a new user group for the Berlin real estate market. Companies in the defense tech sector primarily require high-quality office space and a secure digital infrastructure.
They are seeking work environments that can be adapted to technological development processes. In some cases, this also includes shielded development areas or specialized laboratory spaces. Traditional corporate headquarters are less in demand than adaptable, modern spaces.
In an office market that has been shaped by changing work models since the pandemic, this demand can create additional stability. These are not large-scale leases, but rather long-term users with a strategic focus.
A New Role for Berlin as a Location
Industrial production in the defense sector will continue to take place primarily in the established clusters of southern Germany. Bavaria and Baden-Württemberg possess industrial infrastructure and experienced production workforces.
At the same time, another part of the value chain is gaining importance. Software development and strategic management are increasingly concentrated in innovation-driven metropolitan areas. Berlin can play an important role within this structure. This also shifts the industry’s geographical landscape.
For the real estate market, this does not mean short-term changes in space demand. However, a new, technology-oriented user group is emerging in the high-end office segment.
