Montgomery County Public Schools has significantly shortened the lease for a 161,500 SF warehouse in Gaithersburg after the Montgomery County Council declined to provide funding for the project earlier this year.
The Board of Education originally approved a 10-year lease for space at 750 Progress Way in October 2025. The agreement, which began in July 2026, was expected to cost approximately $43 million when lease payments and buildout expenses were included.
According to BizJournals, Moderately MOCO, and MCPS documents, the Board entered into an amendment to the lease on August 12 that reduced the initial term to two years, through June 30, 2028. The latest change came before the Board on Thursday, when it approved a second lease amendment allowing the property owner to perform design and construction work needed to prepare the leased space for MCPS occupancy.
MCPS will reimburse the landlord for actual costs of the work, up to $575,750. The changes follow the Montgomery County Council’s decision earlier this year not to provide funding for the warehouse project. At the time, MCPS expressed disappointment with the decision and said it would work with the property owner to evaluate its options.
“MCPS is extremely disappointed and frustrated that funds were ultimately not provided to fulfill this lease agreement,” MCPS spokesperson Liliana Lopez said following the Council’s decision in June in a statement to Bethesda Today. “The warehouse lease and the implications of removing funding were discussed in public in County Council budget work sessions. In light of these budget reductions, we will work with the property owner to evaluate our options.”
MCPS has said its existing warehouse was constructed using salvaged materials dating to the World War II era and is undersized, inefficient and in poor condition. According to the school system, a modern facility would improve working conditions, better protect educational materials and strengthen its ability to support schools throughout the county.
MCPS is now seeking approximately $23 million in capital funding for warehouse improvements. The proposed funding is part of the school system’s current capital budget process. MCPS is scheduled to hold public hearings on the proposed changes October 26 and 27, followed by another work session November 2. The Board is scheduled to vote November 19 on the capital request that will be sent to the county.
When the original Progress Way deal was announced last year, MCPS planned to invest approximately $13 million from its capital budget to build out the interior of the warehouse, with partial occupancy originally targeted for fall 2026.
