Why REITs are eyeing government-adjacent space facilities like York in Colorado

Easterly Government Properties, Inc. (NYSE: DEA) has expanded its defense-aligned real estate portfolio with the acquisition of a 138,125 square foot facility in Greenwood Village, Colorado, fully leased to small satellite manufacturer York Space Systems. The asset, known as “York – Greenwood,” features production infrastructure tailored to York’s needs and supports the company’s strategic relationship with the U.S. Space Development Agency (SDA).

This deal underscores a rising trend among real estate investment trusts (REITs) targeting government-adjacent tenants in the defense and aerospace sectors, where long-term, mission-critical leases are increasingly viewed as recession-resilient and strategically vital.

The acquired property includes dedicated cleanroom facilities for satellite manufacturing and was fully renovated for York Space Systems in 2020. Leased on a triple net basis through 2031, the facility includes built-in annual escalations and a 10-year extension option at prevailing market rates.

Why are government-adjacent satellite production facilities becoming attractive REIT investments in 2025?

The acquisition reflects growing institutional interest in the U.S. defense industrial base—particularly around new space infrastructure and standardized satellite production. York Space Systems is among a new wave of aerospace companies leveraging commercial-style mass production to meet military and intelligence satellite demand, offering lower cost and faster turnaround than traditional aerospace contractors.

By focusing on properties that support these next-gen manufacturing models, Easterly Government Properties continues to broaden its exposure beyond classic General Services Administration (GSA)-leased offices into purpose-built industrial assets with defense-adjacent strategic value. The REIT’s CEO Darrell Crate stated that the Greenwood acquisition exemplifies the firm’s strategy of targeting “mission-critical assets” that back U.S. government partners in space and defense sectors.

York’s role as an SDA partner provides further visibility into its pipeline, making the lease more attractive for income-focused REIT investors. The SDA, which functions under the U.S. Department of Defense, is developing low-Earth orbit (LEO) constellations for missile tracking, secure communications, and national defense. York’s S-Class satellite platform plays a key role in that effort.

The facility’s location in Greenwood Village—an established Colorado aerospace cluster—adds another layer of relevance. Nearby institutions include Lockheed Martin Space, Raytheon, and Ball Aerospace, creating ecosystem synergies that bolster tenant resilience and long-term lease viability.

How does the York Space Systems lease structure support Easterly’s long-term cash flow stability?

The Greenwood property lease is structured as a triple net lease (NNN), which places the responsibility for taxes, maintenance, and insurance on the tenant, leaving the landlord with more predictable net operating income. The lease includes annual rent escalations and extends through 2031, offering institutional-grade income visibility.

Easterly also noted that York Space Systems holds a 10-year lease extension option, providing potential upside for stable occupancy beyond 2031. Analysts see this as favorable, given the trend of tenants opting for long-term renewal in mission-specific defense facilities, especially in areas with limited specialized inventory.

With a stable tenant in a growth sector and highly customized infrastructure, the York facility aligns with Easterly’s goal to avoid speculative development in favor of low-risk, cash-generative assets.

What does the acquisition mean for Easterly’s national portfolio and property strategy in 2025?

With the addition of York – Greenwood, Easterly Government Properties now owns or co-owns 103 properties totaling approximately 10.3 million square feet across the United States. While many of its holdings are GSA-leased office buildings, the REIT has increasingly shifted attention toward unique defense-anchored industrial properties.

In its statement, Easterly reaffirmed its intent to continue targeting assets that serve not only direct government agencies but also adjacent defense contractors and infrastructure partners. This reflects an expanding definition of what qualifies as “mission-critical” real estate, especially in the context of space, cybersecurity, and modern battlefield logistics.

Given recent growth in federal space spending and the continued expansion of defense contracts into the private sector, properties supporting satellite design, testing, and production are increasingly seen as core real estate for defense-oriented REITs.

Institutional sentiment toward REITs with government-aligned strategies remains cautiously optimistic in 2025, particularly amid broader commercial real estate volatility. Investors are gravitating toward long-duration, inflation-hedged leases like those embedded in the York deal.

How are defense and aerospace tenants like York Space Systems influencing real estate trends in 2025?

York Space Systems represents a newer generation of satellite manufacturers focusing on volume production rather than bespoke builds. This transition mirrors the broader shift from legacy aerospace models to commercialized, scalable, and modular designs—a trend that is transforming demand for industrial real estate.

The Greenwood facility is one of several that York has expanded into over recent years to support both government and commercial contracts. With SDA contracts continuing through the late 2020s and early 2030s, satellite manufacturers like York are scaling up both personnel and square footage requirements, particularly in proximity to U.S. space hubs like Colorado Springs and Denver.

As more private firms enter the LEO satellite race—especially for national security applications—the physical infrastructure to support rapid prototyping, payload integration, and testing is becoming a new frontier for real estate investors. These facilities are often highly customized and, once leased, rarely experience tenant churn, given the cost of relocation and requalification.

This trend aligns with what institutional investors describe as “sticky tenancy,” a premium feature in an otherwise softening commercial leasing market.

What is the broader outlook for Easterly Government Properties and its REIT peers?

Easterly’s York acquisition comes amid heightened scrutiny of REIT capital allocation and lease renewal risk across the sector. With its disciplined focus on government leases—many of which are GSA-backed or defense-aligned—the REIT has remained comparatively insulated from macroeconomic headwinds plaguing office-heavy peers.

The New York Stock Exchange-listed REIT has continued to communicate its strategy of prioritizing long-term lease duration, high tenant creditworthiness, and national security alignment. As of its last reported results, Easterly’s portfolio had a weighted average remaining lease term of over 10 years, and occupancy consistently above 98%.

Institutional investors remain attentive to Easterly’s balance between acquisitions and capital structure, especially in a higher interest rate environment. That said, assets like York – Greenwood, with reliable rent escalations and low maintenance requirements, are generally perceived as accretive.

Analysts suggest that further acquisitions may be contingent on available capital and continued alignment with U.S. government strategic initiatives, especially around cybersecurity, space, and defense logistics.