The New Geography Of Defense Projects
by Jamie Newell, Walbridge The U.S. defense industry is evolving toward a model that is sending innovation upstream while enabling scale downstream. Emerging technology companies, often referred to as the “disruptors,” are helping accelerate early-stage innovation, while the primes continue to play a critical role in operationalizing, integrating, and scaling deployable capabilities. For decades, the primes have been the backbone of the defense industrial base, leading the development and delivery of complex, long-cycle platforms under structured and reliable contracting models. This approach emphasized stability, risk management, and performance at scale, supported by well-established supply chains and disciplined processes. Today, the landscape is expanding. Current initiatives within the Department of Defense are encouraging earlier advancement of emerging technologies toward manufacturability and deployment. In this environment, primes are building on their strengths as integrators with focus on assembling, certifying, and scaling advanced capabilities, while the disruptors are contributing speed, transformational technologies, and early-stage innovation through contract vehicles such as OTAs, SBIR/STTR programs, and other rapid prototyping awards. Together, this evolving model reflects a more complementary ecosystem, where both established leaders and emerging innovators contribute to delivering cutting-edge capabilities at speed and scale. How Defense Projects Scale in Place As the defense prime landscape continues to evolve, many of the disruptors are still finding ways to reach manufacturability independently, and are relying on academia institutions and innovation centers, such as the DIU, AFWERX, and Army Application Labs for assistance with process engineering, concept modeling, scalability, and compliance that ultimately leads to the production process. In support of this effort, many states or university systems are establishing new incubator programs with laboratories that aid in the development or advancement of protypes, while also bringing the entire ecosystem to the table for faster implementation. A good example of this is NewLab, an innovation hub founded in New York that exists to turn hard, high-impact problems into real-world solutions by bringing together startups, corporations, and government to build, test, and scale technologies. These incubators are creating the environment, partnerships, and infrastructure needed to move ideas out of the lab and into commercialization, providing all the key elements needed to enable faster deployment in manufacturing. This shift from boutique innovation to industrial throughput is reshaping where projects land, as these locations become permanent headquarters in communities that perform well during their support from prototype to rate production by delivering industrial facilities with expansion capacity, reliable power, and realistic schedules. Building collaborative spaces means advancing industrial and office speculative development in parallel to support the entire ecosystem. NewLab’s recent announcements of two new locations in Detroit and New Orleans were centered around manufacturing infrastructure, facilities and talent pools that encompass the entire ecosystem, providing economic growth that allows companies to scale into manufacturing operations without leaving the area. NewLab in New Orleans (top) and NewLab in Detroit (bottom). (Photos: NewLab) Ecosystems Are The Full Stack Supporting The Mission What was once a supply-chain exercise is now an ecosystem strategy, centered in states that host the country’s largest military installations. North Carolina is one state that is home to two of the largest military installations by population and encompasses a very diverse and growing defense ecosystem. Companies that exist in this ecosystem are scaling in areas of AI, machine learning, autonomy, robotics, cyber and electric warfare, energy, material science, composites, logistics, critical minerals, biomanufacturing and quantum. While initiatives to create a DIU accelerator hub in North Carolina are young, the AFWERX innovation hub, located at First Flight Venture Center in Research Triangle Park acts as a DoW innovation ecosystem node that promotes collaboration among startups, academia, industry, and military stakeholders, linking local tech companies with military innovation partners such as Army, Navy, the National Security Innovation Network (NSIN), and other defense research offices. This is effectively a defense innovation anchor in NC that catalyzes early-stage engagement and partnerships similar to the Capital Factory in Austin, Texas. The Capital Factory is a startup accelerator, venture capital investor and innovation hub that has become a major focal point for U.S. defense innovation outside of Washington, D.C. It serves as a front door to the DoW for startups and tech companies by co-locating commercial innovators with government innovation units and defense partners. Its establishment has not only helped shift Austin’s broader tech community into a strategic defense innovation center but has contributed to the growth across Dallas-Fort Worth and other surrounding areas, even expanding into Oklahoma with the recent announcement of the UNION and Firehawk Aerospace project partnership, which has only increased its relevance on a national level. The Capital Factory serves as the connective tissue for these companies within the Texas ecosystem and provided Firehawk with $60 million in Series C. Following this partnership announcement, UNION and X-Bow announced a partnership to rapidly scale production of rocket motors. X-Bow is another prime example of a company that developed from funding within Capital Factory Ventures, as their Series A round amounted to $27 million and Series B included another $105 million. While X-Bow is headquartered in New Mexico, their massive production expansion is taking place in Luling, Texas. Texas is the proven example of how a community’s defense ecosystem can contribute to high-value jobs and long-term taxable investment across a region. (Photo: Adobe Stock/Paul) Execution Is The Differentiator From incubators to megasites, the purpose is urgency and the key driver in the site selection process for any defense project has now become political alignment. Communities are being evaluated on execution capacity over incentives alone as companies are currently bypassing communities that cannot most fast enough even with stellar incentives on the table. Having the correct project team in place is also crucial to these projects, but the true competitive advantage begins with a community that can hack through the bureaucracy to execute by delivering speed and certainty, infrastructure transparency, a sense of comfort with defense manufacturing, and a long-term partnership mindset. Site selection professionals are now becoming a key piece of the ecosystem, as location is now viewed as the weapon system where selecting the right site ultimately determines if it reaches the battlefield. Rapidly growing threats are fueling the defense transformation, and the priority of the DoW is to supercharge the US industrial base by revitalizing defense industry capacity, accelerating acquisition, scaling production, and integrating innovation to ensure readiness and supply resilience. The most recent National Defense Industrial Strategy (NDIS), released on January 23, 2026, reorients the defense policy toward defending the homeland, deterring China in the Indo-Pacific through strength instead of confrontation, increasing burden-sharing with U.S. allies and partners, and delivering a revitalized defense industry capable of rapid innovation and production. For this to become reality, communities need to move quickly and transparently, understand industrial and defense requirements, offer infrastructure certainty, and align politically and culturally with defense manufacturing. Hardware Backed By Geography The Trump administration recently announced another $1.5 trillion dollar defense budget for FY 2027, representing a 44% increase from previous years, contributing record-high defense spending levels into a multitude of appropriations and procurement programs that directly fund weapons, ships, aircraft, munitions, and related research and production. The FY 2027 funding is also essentially the engine, hardening the supply chain, as funding allocations encompassed within the 2026 NDIS are available through 2029 under current law, meaning they aren’t annual base dollars, but multi-year allotments that Congress has permitted, and can be summarized into four primary focus groups: Shipbuilding & the Naval Industrial received $66 billion for base projects that include guided-missile destroyers and expanded facilities, included in the “Golden Fleet” modernization program. Missile defense and homeland protection systems received $17.5 billion specifically to support the Golden Dome missile defense program. Innovation priorities that contribute to autonomy, AI, quantum, and directed energy R&D for nuclear advancements. Industrial base resilience contributing investments in the supply chain for munitions and other strategic sectors, including personnel. The FY 2027 budget includes a significant portion of the $350 billion reconciliation request intended to rapidly expand the defense industrial base to replenish munition stocks depleted by ongoing conflicts. Stats By Service Branch Included In FY 2027 Defense Budget The Navy continues to command the largest share of the budget, particularly due to significant investments in fleet modernization. Beyond the base defense budget, the administration has proposed a large supplemental package to sustain ongoing military operations tied to the Middle East, pushing total national security spending toward roughly $1.5 trillion when combined. Detailed budget justification materials released in late April 2026 provide program-level allocations across the services, highlighting increased investments in readiness, munitions, and regional force posture. The funding favors hardware and with fast capital comes compressed site timelines, where shovel-ready sites can be the only consideration as companies are being pushed to rapidly deploy out of the lab and onto the battlefield. The two industry sectors that have received the most substantial appropriations, shipbuilding and munitions projects, are also currently seeking locations across the states that are encompassed within existing former WWII assets. Shipbuilding projects are leaning into Maritime Prosperity Zones (MPZs) that are along capable coastal and waterfront regions with existing brownfield or ready sites and facilities, as well as the presence of dry docks. While most shipyards are along the East Coast or Gulf regions, California has potential to drive growth in this sector. California Forever is a three-pillar planned development focused around reviving a prior shipbuilding hub and enacting a regional coalition to qualify the Solano Shipyard as a MPZ. This is a key driver in California’s maritime industrial strategy, as the development is encompassed within a foreign trade zone and is underway with plans to additionally qualify as an opportunity zone. The shipyard would span over 7,500 acres and has potential to be two and half times larger than the largest private shipyard in China. The other pillars include the Solano Foundry, spanning over 2,100 acres with potential for over 40 million square feet of advanced manufacturing, and Solano Living, a planned urban development encompassing over 170,000 homes. Aerial view of California Forever, a proposed master-planned community in Solano County, CA that aims to build a shipyard, foundry, and walkable city. (Image: California Forever) Missile defense, or munitions, projects are also seeking megasite availability and the key project drivers are access to large parcels with buffer zones and infrastructure intensive capabilities, with regulatory certainty mattering more than incentives. These companies are receiving sustained multi-year funding under procurement authorization grants extending from the National Defense Authorization Act (NDAA), Defense Production Act (DPA), and other missile production contracts. Many former U.S. Army Depot sites used during WWII include underground igloos or bunkers for the storage of munitions as well as existing facilities that already adhere to required standoff distances and buffer zones. Because these projects require more land and include less labor and more controls than a typical megasite project, many communities are not pursuing them with the motivation needed at this time. Communities should keep in mind that right now, the U.S. doesn’t lack a demand for cars, it lacks surge-ready, domestic munitions capabilities. Working with these companies does something that auto plants cannot do, which is close a strategic vulnerability in the nation’s security. Changing The Rural Market Landscape Today’s expanding defense climate presents a meaningful growth opportunity for rural communities particularly as defense companies seek locations that align with technical labor availability, secure and scalable sites, and long-term cost stability. With demand for defense manufacturing operations pursuing locations within proximity to military installations that are commonly positioned in rural submarkets, companies are seeking access to clearance-eligible talent, lower land and operating costs, and the ability to develop specialized facilities that are difficult to accommodate in urban markets. As a result, rural communities that can deliver workforce partnerships, infrastructure, and development-ready industrial sites are increasingly well positioned to capture defense investment, diversify their tax base, and anchor durable, mission-critical economic activity. Defense industry investment is also serving as a catalyst for these rural communities that are needing to create a substantial tax base in order to fund essential infrastructure improvements such as the extension of water and sewer lines, upgrades to wastewater treatment, and the expansion of natural gas service. Supporting this industry while the funding is hot will simultaneously attract additional businesses, support workforce development, and drive long-term economic growth.
Source: Business Facilities