MCPS Cut Its Warehouse Lease to Two Years in August; Board Approves Up to $575,750 for Fit-Out Work

The Montgomery County Board of Education amended its lease for a Gaithersburg warehouse on Aug. 12, 2026, cutting the initial term from 10 years to two, through June 30, 2028, according to a superintendent’s memo posted for the Board’s Oct. 22 business meeting.

On Thursday, the Board approved a second amendment, described in the same memo, under which Montgomery County Public Schools will reimburse the landlord at 750 Progress Way for its “actual incurred costs in an amount not to exceed $575,750” for design and construction work “necessary to prepare the Leased Premises for occupancy by Montgomery County Public Schools.” The second amendment was item 6.12 on the Board’s Oct. 22 consent agenda. The Board approved it along with the other consent items, without separate discussion, by a show of hands that the presiding officer called unanimous, according to the meeting video.

On Oct. 12, we reported MCPS’s statement that it had “negotiated a revised two-year lease” but had not released the terms.

What the Board approved in 2025

The Board approved the original lease on Oct. 30, 2025 (Resolution No. 457-25) with MFV 700 NFA, LLC and DNIP4 700 NFA, LLC, which the 2025 Board memo describes as Maryland limited liability companies.

The 2025 memo lists about 161,500 square feet, a 10-year term ending June 30, 2036, two five-year renewal options, and base rent of $18.25 per square foot, or $245,614.58 a month, starting July 1, 2026. Rent was set to rise 3% a year for two years starting July 1, 2027, then 3.25% a year for years four through six and 3.5% a year for the final four years. (MCPS’s Oct. 15 presentation describes the building as “approximately 165,000 square feet.”)

An earlier Moderately MOCO story, published Oct. 12, repeated a $29.5 million total for the original 10-year lease that Montgomery Community Media reported in November 2025. The $29.5 million figure equals 120 months at the first-year rent and leaves out the scheduled increases. Applying the escalation schedule in the 2025 Board memo, base rent over the original 10-year term would have totaled about $34.1 million, by our calculation.

What the new memo does not say

The Oct. 22 memo does not state the rent under the two-year term, what the $575,750 in work covers beyond “an agreed scope of work and budget,” which budget will pay for it, or how the Aug. 12 first amendment was approved. The first amendment itself is not attached.

If the original rent and the first 3% increase still apply, base rent from July 2026 through June 2028 would total about $5.98 million. That is our estimate; MCPS has not published the rent under the amended lease.

We did not find the first amendment on the Board’s business meeting agendas from July 16 through Sept. 24, 2026, or in the Board’s published reports of closed sessions held from June 25 through Oct. 8. The 2025 resolution authorized the superintendent to “take additional actions, as necessary, to effectuate the transactions set forth above.”

The $23 million request is for this building

MCPS’s Oct. 15 presentation on its fiscal 2028 capital budget lists “$23 million for warehouse construction build-out” as one of “two exceptions” to keeping projects at approved funding levels.

A slide titled “Our New Warehouse…” ties that request to 750 Progress Way. The slide says MCPS has “a two-year lease for use of the 750 Progress Way property,” is “in design, permitting, and construction to move into the space,” and is “seeking additional funds to complete the remaining build out needed to stay long term.” The slide adds: “This requested amendment seeks to restore the long term lease–much less costly than building a new warehouse and allows us to vacate Stonestreet property.”

Bethesda Magazine reported the $23 million warehouse request and the presentation’s aim to “restore the long term lease” on Oct. 16, the day after the work session. Bethesda Magazine also reported that the Board will vote on its capital request on Nov. 19.

The superintendent’s recommended capital program lists the “Materials Management Building Relocation” project at $25.5 million in total: $35,000 through fiscal 2026, $2.465 million remaining in fiscal 2027 and the requested $23 million in fiscal 2028. The document says last year’s requested funding “would have been used for the interior construction of a centralized warehouse space.”

What the County Council cut

MCPS’s recommended capital program says last year’s warehouse funding “was completely removed.” MCPS’s October statement, published in our Oct. 12 story, said the County Council “eliminated funding for the full renovation and buildout of a centralized MCPS warehouse.”

In June, Bethesda Magazine reported that MCPS had sought $13.1 million over six years for the warehouse, plus more than $3.6 million in operating funds for rent, and that the Council’s budget included neither.

MCPS’s Oct. 15 presentation says its current warehouse on North Stonestreet Avenue in Rockville “was constructed using salvaged materials from the WWII era” and “no longer meets the scale, safety or efficiency of a modern district operations center.” In its October statement, MCPS said breaking the lease “would have resulted in substantial financial penalties” and that the revised lease “reduces renovation costs, stays within available funding and provides usable, modern warehouse space.”

Still unanswered

• What is the monthly rent under the two-year term, and did the first amendment change the escalation schedule or the early termination terms?
• Who approved the Aug. 12 first amendment, and under what authority? Will MCPS release it?
• What work does the $575,750 cover, and which budget pays for it?
• If the Council does not fund the $23 million, what happens at 750 Progress Way after June 30, 2028?

We have not yet put these questions to MCPS; this story will be updated with any response.

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