The federal fiscal year turned over on October 1. For a lot of contractors in Northern Virginia, that means a September award in hand, a hiring plan due, and nowhere to put the people. For others, it means a program they have been chasing is now stuck behind a continuing resolution.
Both groups have a real estate decision coming, and both tend to make it the same way: fast, under pressure, on a landlord's standard lease that was never written with a five year period of performance in mind.
Before real estate I served as a military officer, so the contracting calendar is not abstract to me. What follows is how I would approach space this quarter if I were sitting in your seat.
Why October matters
September is the busiest month in federal contracting by a wide margin. The Congressional Research Service, looking at five years of Defense Department data, found that September obligations ran roughly double those of any other month. A meaningful share of the year's new work gets awarded in the final weeks before September 30.
This year the new fiscal year opened under a continuing resolution. H.R. 6500 was signed on September 2, 2026 and funds the government at fiscal 2026 levels through December 11. Continuing resolutions generally keep existing programs running at prior year rates and restrict new starts.
That splits the market into two kinds of contractor right now:
You won in September. The award is real, the start date is close, and you need seats. Your problem is speed, and the risk is signing something too long or too rigid because you were in a hurry.
You are waiting on fiscal 2027 money. The program may be funded in December, or later. Your problem is uncertainty, and the risk is committing to space before the contract exists, or waiting so long that the good options are gone.
One more timing detail that catches people: an award is not final until the protest window closes. GAO has 100 days to decide a bid protest. If you are the incumbent's replacement, plan for the possibility that a protest pauses the work, and do not sign a lease that assumes it will not.
The core mismatch: contract term versus lease term
A typical federal contract is a base year plus option years. A typical landlord wants a long lease, often five to ten years, especially if they are funding improvements. The government can decline an option year. Your landlord will not decline your rent.
That gap is where contractors get hurt. Four provisions close it:
A contract-loss termination right. The right to exit early if the contract is not renewed or is terminated, typically in exchange for a fee that repays the landlord's unamortized costs. Landlords expect this request from government contractors in this market. Ask for it in the letter of intent, not at lease drafting.
Expansion rights. A right of first offer or refusal on adjacent space, so a recompete win or a new task order does not force a second location or a mid-term move.
Contraction rights. The mirror image. If an option year is not exercised, you can give back a defined block of space on a set schedule.
Assignment and sublease flexibility. Contracts get novated, teaming partners change, and companies get acquired. The lease should allow transfer to a successor or affiliate without the landlord holding up the deal.
None of these is exotic. All of them are much harder to get once the landlord knows you have a start date and no alternative.
If the work is classified, the SCIF drives the schedule
Demand for secure space is real and still growing. JLL reports that its SCIF project volume in Northern Virginia and Maryland went from about 907,000 square feet in 2023 to 1.6 million in 2025, and the firm describes completed, available SCIF supply as limited.
Three facts shape every SCIF lease decision:
Do not build ahead of your sponsor. Accreditation runs through a government Accrediting Official, and the standard advice from SCIF builders is to wait for your DD Form 254 and engage the AO before design starts. The government is under no obligation to accredit a facility it did not sponsor, and post-construction accreditation is increasingly rare.
It takes longer than the contract start date allows. Plante Moran puts accreditation at six to eighteen months after construction is complete, depending on size, complexity and how responsive the AO is. Design and build come before that.
It costs far more than ordinary build-out. Published estimates range from roughly $350 to more than $1,000 per square foot, with smaller and more complex rooms at the high end. Because each secure space is built to a specific sponsor's requirements, a new tenant generally builds its own rather than inheriting an existing one.
What that means for the lease:
- Split the requirement. Put unclassified staff in move-in-ready space now, and plan the secure footprint on its own track and its own timeline.
- Get landlord consent in the lease, not later. SCIF construction touches walls, ceilings, ductwork, power and access control. Approval for all of it should be written into the lease up front.
- Cap or waive restoration. Removing a SCIF at expiration is expensive. Negotiate that obligation away, or cap it, before you sign.
- Control access. Landlord entry to a secure area needs advance notice and escorts, and the lease should say so.
- Match the term to the investment. If you are spending hundreds of dollars a foot on improvements, the term, renewal options and any landlord contribution should reflect that.
Where the leverage sits in Northern Virginia
Government contractors are the market right now. Cresa's second quarter 2026 report found that defense and government contractors accounted for the largest share of Northern Virginia leasing, led by Peraton's 285,000 square foot commitment across two buildings in Herndon.
The broader numbers still favor tenants, unevenly. Cresa puts Class A vacancy at 26.9 percent against 16.1 percent for Class B. Landlords holding empty Class A floors in Reston, Herndon, Tysons, Fairfax and Arlington have every reason to say yes to the provisions above.
The catch is that the pool of buildings that work for cleared contractors is smaller than the vacancy rate suggests. Security, power, rooftop access, and a landlord who has done secure build-outs before all narrow the list. The negotiation is easier than it was three years ago. The search is not.
What to do this quarter
If you won in September: take move-in-ready space for the immediate headcount, negotiate termination, expansion and contraction rights in the letter of intent, and keep the secure space decision separate.
If you are waiting on fiscal 2027 funding: tour now, shortlist two or three buildings, and talk to landlords about holding space or giving you a right of first offer contingent on award. Signing is the last step, not the first.
If you have a lease expiring in the next two years: your renewal is a recompete in its own right. Read the notice deadline before you read anything else.
The bottom line
The contract dictates the lease. When that order gets reversed, contractors end up paying rent on space a program no longer needs, or scrambling for seats a program suddenly does.
Brian Perry Advisory represents tenants only, never landlords, across Northern Virginia, Washington DC and Maryland. If you have an award in hand or one on the way, a thirty minute call on your timeline, your space options and the lease terms to ask for costs nothing.
Sources: Congressional Research Service, DOD Contract Obligations: End-of-Year Concentration (FPDS data, FY2012 to FY2016); The White House, H.R. 6500, Continuing Appropriations and Extensions Act, 2027, signed September 2, 2026; 31 U.S.C. 3554 (GAO bid protest timeline); JLL data via CRE Daily, SCIF Demand Reshapes Greater DC Office Leasing, September 17, 2026; Plante Moran, Why Classified Space Is Now Essential for Federal Contractors, May 2026; Area Development, Navigating the New Era of SCIF Construction; Adamo Security Group, on the build-on-risk model; Cresa, Q2 2026 Northern Virginia Office Market Report.
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