Mid Atlantic Research Reflections 2023 Aerospace & Defense

In FY 2022, the United States Department of Defense (DoD) deployed $99.9 billion in defense spending (contracts, grants and payrolls) across the District of Columbia, Virginia, and Maryland. This represents 18% of all defense contract, grant and payroll spending across the U.S. and is an increase of 1% year-over-year.

Virginia is a key hub for the aerospace and defense (A&D) industry, ranking first in the nation for both defense dollars spent ($62.7B) and defense spending as a percentage of GDP (9.7%). Maryland and D.C. also play important roles in the industry, with defense contracts accounting for 5.6% and 6.7% of GDP, respectively. Consequently, A&D tenants are a major office occupier across the region. Leasing by these tenants has remained steady through the pandemic, with leasing numbers returning to the pre-pandemic average after a dip in 2020. Year-to-date, A&D tenants have signed leases totaling 1.3 million sq. ft. across the region, near the long-term leasing average for the industry.

Northern Virginia captured the majority (89%) of A&D activity in 2023, with 18 tenants leasing 1.1 million sq. ft. year-to-date. Comparatively, just six transactions totaling 142,000 sq. ft. took place in Suburban Maryland and Washington, D.C.