The US space industry is entering a phase of mass production, which is changing the industrial real estate market. Companies that until recently were mainly looking for labs and engineering teams are now leasing factories, building production campuses and reserving space years before they are ready.
In the first half of the year, space companies attracted $11.3 billion in venture capital. Among them are Varda Space Industries, Sierra Space and Astranis. 78% of the global space economy is private, according to the Space Foundation, and private investment in the sector is expected to reach a record $100 billion this year.
“There is no other industry where real estate is such a powerful catalyst for a company’s future success,“ said Mac Burridge, managing director of advanced manufacturing at JLL in Los Angeles.Former toy factory to build spacecraft
One of the most telling examples is the deal by Varda Space Industries in El Segundo, California. In March, the company leased a 205,000-square-foot former Mattel factory. The building, which used to make Hot Wheels and Barbie, will be used to build spacecraft.
Varda is developing automated laboratories and satellite platforms that are launched into orbit. In microgravity, the labs grow molecular crystals for the pharmaceutical industry. This is the company's second facility in El Segundo, part of the South Bay area of Los Angeles.
The area attracts aerospace and defense companies because of its talent pool and the presence of established aerospace companies. According to Burridge, Southern California is as important to these companies as the San Francisco area is to technology companies.
Land and power shortages slow new deals
Competition for industrial real estate in the South Bay is intensifying. About a third of industrial leases in the Los Angeles area in the third quarter were signed there. Net take-up is projected to reach 2.5 million square feet in 2026, about half of the region’s total.
The share of aerospace and defense companies in industrial leases in the region rose to 11% in the second quarter, up from an average of 2% from 2015-2024, according to Newmark. Burridge reports demand for 5 million square feet of modern manufacturing space, with some tenants signing contracts 12 months in advance.
The problem isn’t just a lack of available buildings. New manufacturing sites need more electrical capacity, and securing the necessary connections in the South Bay can take up to 24 months.
„There are no existing buildings left to accommodate them. “They’ve swallowed everything,” says Martin Pupil, partner and managing director at Stream Realty Partners.New Campuses Near Spaceports
The growth is also being felt outside of California. In Brevard County, Florida, Hines has broken ground on the second phase of the Space Coast Innovation Hub on a 100-acre site. The project will add 1.1 million square feet of manufacturing and logistics space near Cape Canaveral.
Also in the works in the area are the 307,000-square-foot NASA Causeway Logistics Center, Amazon’s 24-acre Project Satellite in Titusville, and Blue Origin’s 830,000-square-foot manufacturing facility.
In early October, Blue Origin announced a satellite manufacturing campus in Hutto, Texas. The investment is $550 million, the area is 1.3 million square feet, and the promised new jobs are 2,000.
Companies choose locations based on the availability of staff, vacant land and electrical capacity. Local governments compete for projects with financial incentives. In Louisiana, a $27 billion stimulus package helped Vermilion Parish attract SpaceX's planned $100 billion Starbase. SpaceX intends to use it to expand its Starlink satellite launches.
According to the US Department of Transportation, the number of annual launches and re-entries in the country could reach 10,000 by 2035, up from 250 in 2025. If this forecast comes true, the space race will continue to create demand not only for factories and warehouses, but also for spaceports, hotels and commercial space around them.
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