U.S. military expenditures were about $954 billion in 2025. That was roughly one-third of global military spending and around 3.1% of U.S. GDP. China was a distant second at an estimated $336 billion. (Hmm, that's good to know.)
For fiscal year 2026, the administration requested roughly $1.01 trillion (a 13.4% increase), with the Department of Defense portion around $962 billion.
Looking ahead, the FY2027 request has been described in the $1.45–1.5 trillion range (a 45% increase!!), framed as a major rebuild focused on deterrence, munitions, industrial capacity, and high-end capabilities.
Bottom Line: The U.S. is gearing up for war.
The guy to watch is Palmer Luckey - sort of like the Elon Musk of military contractors. In just a few short years, he has built Anduril Industries (named after the sword from The Lord of the Rings) into a powerhouse.
Anduril is already selling affordable, modular (he makes his missiles from off-the-shelf parts) Barracuda cruise missiles to Taiwan. More precisely, the Barracuda's are being built there in Taiwan, after a sale of his technology. The Taiwanese intend to turn the South China Strait into a hellscape.
This amazing defense contractor also just built, in less than a year, a 900,000 sf factory, near Columbus Ohio, to build Fury autonomous, loyal-wingman, drones to accompany our expensive F-35's. The amazing fact is that Anduril has already rolled the first completed stealth drone off the assembly line!
Other defense contractors are scrambling to mass produce cruise missiles and interceptor missiles for the US military. Will they be completed in time? That's the $24,000 question.
What has this to do with commercial real estate? Every one of these new factories will require tens of thousands of parts manufactured by thousands of smaller subcontractors. These smaller military subcontractors will require industrial space.
Here is my point today: I think that many older and under-utilized industrial buildings in America will find soon new tenants, as these non-military, civilian companies get squeezed out of their existing facilities.
Industrial space may be about to enjoy one helluva bull market. :-)
Imagine if the United States could have defeated Nazi Germany at a cost of just a two-dollar increase in the price of gasoline. The leader who organized such a victory would have been a national hero.
