By Patrick Sisson
March 28, 2025

Vast, a start-up seeking to fabricate, assemble and launch the world’s first commercial space station, leased 165,000 square feet of industrial space that was initially going to be a product distribution warehouse.Credit…Stella Kalinina for The New York Times

Looking for a site where workers can weld the panels of a space station together and then shoot bullets at them to see if they can withstand meteoroid hits?

You’re not alone.

Defense and aerospace companies leased 11.3 million square feet in 2024, up from 7.1 million in 2022, said Tom Taylor, who manages the aerospace and defense practice at JLL, a real estate firm.

“We do believe the aerospace and defense industries, in particular, are going to be one of the demand drivers for new industrial space,” Mr. Taylor said.

The leased spaces typically have large open-floor plans for machinery and manufacturing, high ceilings for cranes and special assembly gear, sterile and air-filtered rooms, and lots of power for heavy-duty machines to build — and sometimes blow up — weapons, rockets and drones.

Besides manufacturing space, there’s office space. From the end of 2023 to the end of 2024, roughly 426,786 square feet of office leases came from the defense and aerospace sectors, triple what the legal industry leased, according to data that CBRE, a real estate services firm, shared with The New York Times.

The flurry of real estate activity in the defense sector has been buoyed by global conflicts that have accelerated the production of weapons. The Department of Defense’s budget was $841 billion in the 2024 fiscal year, up from $816 billion in 2023, both record amounts. And while Defense Secretary Pete Hegseth wants to cut 8 percent from defense budgets in each of the next five years, he is putting a priority on spending on drones and autonomous weapon systems. That has opened up opportunities for defense tech start-ups, which can typically move their innovations to the battlefield more quickly than traditional defense contractors can, theoretically saving the government time and money.

In the aerospace sector, which has been commercialized after decades of government dominance, advances in technology have made it more possible for start-ups hoping to be the next SpaceX or Blue Origin to enter the market. A record 274 start-ups in the aerospace and defense sectors raised new funds in 2024, according to PitchBook, which tracks start-up funding.

“It’s cheaper for NASA to outsource what they used to do, so now there are all sorts of different space start-ups trying to get in on this,” said Michael Soto, vice president of research at Savills, a commercial real estate brokerage firm.

The most highly secured spaces, known as sensitive compartmented information facilities, or SCIFs, can cost $1 million or more to construct.

The Haven-1 Primary Structure at Vast’s headquarters in Long Beach, Calif. Leasing for the defense and aerospace industry was up 100 percent across the country in 2024, according to the real estate firm JLL.Credit…Stella Kalinina for The New York Times

Inside the Haven-1 Primary Structure at Vast headquartersCredit…Stella Kalinina for The New York Times

“There’s a real demand for specialized spaces and secure facilities,” said Gary Horwitz, managing director of the Los Angeles region at JLL. “It’s really expensive infrastructure, and landlords who are investing in these buildings are finding good success filling them.”

Companies have to make sure they can speak securely with military clients, and they have to make sure the sites aren’t owned by any foreign nationals and don’t have spying risks, said Taylor Wood, a vice chairman at Savills.

“You can’t have line-of-sight issues for picking up sound and videotaping, like mouthing conversations,” Mr. Wood said. “It sounds straight out of a Jason Bourne movie. And they need drone nets on the tops of buildings so someone can’t land or hover one above an office and record conversations.”

Some start-ups share spaces to split the cost. More companies like Nooks, which is based in Washington and is called “the WeWork of SCIFs,” are offering shared and specialized communications facilities.

A new section of Vast headquarters in Long Beach. The number of funding deals for the aerospace and defense sectors set a record in 2024, according to PitchBook.Credit…Stella Kalinina for The New York Times

Equipment and facilities at Vast headquartersCredit…Stella Kalinina for The New York Times

Most of the leasing activity is taking place near existing research and military facilities and where there are large pools of talent. In Southern California, 145 aerospace and defense firms lease 13 million square feet, according to JLL, and in Florida, there are 17,000 aerospace-related companies and $5.5 billion in space-related developments in the pipeline.

Many landlords and developers are expanding the spaces they have and scooping up what could be used for research and development or manufacturing. In central California, Vandenberg Space Force Base, a SpaceX launch site, has plans to expand sites on and off the base to provide space for other start-ups. Near Silicon Valley, the University of California, Berkeley, and NASA have joined forces to invest $2 billion into a research campus adjacent to NASA’s Ames Research Center.

In October, the Davis Companies, a Boston-based investor, bought three properties in Atlanta that were leased by Anduril Industries, a defense tech firm that is working with the Pentagon.

The developer AZ Opportunity Fund bought 32 acres to build the Colorado Aerospace Business Center, which broke ground in November. Brady Welsh, principal of the fund, said his firm saw an opportunity to add much-needed supply catering to the region’s defense contractors and start-ups.

The industry has been creative with its spaces. Some companies are cutting down on the square footage they need, with the use of advanced manufacturing technologies like 3-D printing, which minimizes the need for inventory, or moving into warehouses, taking advantage of a market that has had cooling demand.

An employee works with 3-D printers at Mach Industries. Advanced manufacturing technologies like 3-D printing, which minimizes the need for inventory, can reduce the space companies need.Credit…Stella Kalinina for The New York Times

By mid-2025, Mach aims to add the capacity to produce thousands of drones a month.Credit…Stella Kalinina for The New York Times

In Huntington Beach, Calif., Mach Industries, which has a contract with the Army, makes weapons in a 150,000-square-foot warehouse. One afternoon last fall, the company’s headquarters were humming along, with 3-D printers spitting out the parts for drones, as speakers blasted Led Zeppelin. By mid-2025, Mach aims to produce thousands of drones a month. Its drones can find targets using artificial intelligence and radio frequency sensing when GPS is severed, an advantage in a war zone racked with electronic jamming.

About 15 miles away, in Long Beach, Calif., Vast, a start-up seeking to fabricate, assemble and launch the world’s first commercial space station, leased 160,000 square feet of industrial space in 2023 that was initially going to be a product distribution warehouse. Inside, where there was a persistent smell of coolant, workers manned lathes and extrusion machines, fashioning parts for the prototype.

In one room, a team of workers welded together aluminum rings to make the Haven-1 space station’s body. The control room to monitor the initial flight is expected to be completed by the end of April. Workers can test equipment on an industrial vibration machine that can simulate the G-force of a rocket launch. Elsewhere, bullets are shot into aluminum panels to make sure the space station can withstand a direct hit from a meteoroid. Coders work on top of modular office pods set up in the middle of the factory floor, an easy solution for desk space.

The growing industries’ promise of high-tech and high-paying jobs has helped push states and cities to offer attractive incentives for start-ups to relocate, including flexible permitting and assistance for permit applications.

In California, the city of El Segundo, which was the home of SpaceX’s first headquarters, offers flexible permitting. The city has 12 aerospace and defense companies occupying 740,000 square feet, according to JLL data, and a new development, Brickworks, is set to open this year and provide an additional 100,000 square feet of space.

The flurry of real estate activity in the defense sector has been buoyed by geopolitical tensions and conflicts that have accelerated the production of arms and weaponsCredit…Stella Kalinina for The New York Times

In Long Beach, where Vast is based, city government plied its plane-building heritage, in 2021 rezoning 437 acres of industrial and warehouse space that was once used to build Boeing C-17 cargo planes.

Traditionally, cities like Long Beach would see warehouse space become a logistics center supporting a handful of jobs that don’t pay a lot, said Long Beach’s mayor, Rex Richardson. “Or, you can take a million-square-foot building and put in some advanced manufacturing, where a welder can make 45 bucks an hour without a bachelor’s degree,” he added.

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Original Article Can Be Found Here At NYTimes.com