Real Estate Challenges in Aerospace | vcfo

This article was co-authored by Carter Freeman and Merle Waterman.

Bridging the Real Estate Barrier in Aerospace & Defense

Across the aerospace and defense (A&D) sector, the tightening availability of secure real estate is a big issue for many companies wanting to work in the A&D sector. As companies race to secure work tied to next-generation defense, intelligence, and space programs, many are discovering that the physical environments known as SCIFs (Sensitive Compartmented Information Facilities), which are required to handle that work, have become one of the most constrained and consequential assets in the industry. For early-stage and mid-sized companies, especially, this constraint is emerging as a significant growth bottleneck. In this post, we explore the rise in SCIF requirements, the chicken-and-egg challenge SMBs face, and practical steps for navigating the SCIF environment in A&D.

The Expanding SCIF Barrier

Building and certifying a SCIF is an incredibly complex, expensive, and time-consuming endeavor. SCIFs are engineered not just as secure rooms but as multi-layered environments designed to withstand physical intrusion, electronic and acoustic monitoring, visual surveillance, and even vibration-based intelligence techniques. Requirements reach down to the materials in the walls, the construction methods, and even the specific type of ceiling tiles. Any misstep can restart the months-long certification cycle.

At the same time, the regulatory landscape itself has become a moving target. Recent federal shifts have ushered in new protocols, heightened scrutiny, and revised schedules. The resulting backlog is affecting everyone from primes to subcontractors to the military itself. If a facility falls out of compliance, getting inspectors to return for recertification in a timely fashion is proving to be extremely difficult.

A more profound national security concern drives this tightening environment. Sensitive U.S. research and technology have repeatedly surfaced in adversarial systems, and the federal government is now aggressively closing every known vulnerability in the supply chain and facilities ecosystem as well as seeking out ones as yet unknown. That scrutiny has intensified the pressure on companies to meet standards that are evolving faster than many can track. Without a strong connection to military partners, regulators, and knowledgeable advisors, companies can miss key updates.

The Chicken-and-Egg Reality for SMBs in A&D

For smaller aerospace and defense firms, the A&D real estate landscape creates a punishing paradox: you cannot pursue some government programs without SCIF access, but you cannot reasonably justify or finance SCIF access without reliable contracts. A participant in a recent panel centered on challenges in aerospace and defense summed it up this way: “To do the work, you need the space. To get the space, you need the work.”

Many organizations are exploring co-location or shared SCIF arrangements, often with universities, primes, or specialized facility operators. Universities in particular are becoming active partners because many of their research grants now require secure environments as well. These models will not solve the broader shortage, but they can offer companies a viable on-ramp into A&D programs without the impossible burden of building their own facility.

Still, even these shared environments require planning, early engagement, and an understanding of local permitting, incentives, and regional SCIF infrastructure. Whenever possible, pursue them as a strategic option before the need is urgent.

The Burden of Building Alone—and the Importance of Early Expertise

It can be tempting for growing companies to say “we’ll build our own SCIF,” but that path is usually imprudent and impractical. In most cases, the economics don’t work. The cost of construction and certification is too high, and the ongoing delays are too unpredictable.

SCIF requirements now span areas such as electromagnetic shielding, structural reinforcement, specialized HVAC systems, advanced acoustic protection, and more. The leader of a firm that recently attempted to self-manage a SCIF buildout found that the effort drained internal engineering capacity, caused significant schedule slips, and resulted in a failed inspection. Trying to self-manage resulted in a costly restart and prompted them to hire SCIF consultants whom they had initially declined.

Given the stakes, the most critical takeaway for CEOs is not to wait until you need a SCIF to start looking for one. A recommended first step is to explore the availability of existing locations that meet requirements and may fit your company’s needs. Then, If building or outfitting your own facility remains a consideration, engage local economic-development groups early, connect with elected officials to understand incentives, and ensure your real estate advisors and construction contractors have deep SCIF experience. Additionally, bringing specialized consultants into the conversation well before design or site selection begins can be highly beneficial.

The SCIF Challenge Isn’t Going Away—But You Can Get Ahead of It

The aerospace and defense sector is accelerating into a new era of innovation and scrutiny, and SCIF space sits at the center of that shift. For SMB leaders, navigating this environment effectively is a strategic imperative. The companies that will thrive in the A&D ecosystem are those that start early, stay informed, and surround themselves with the right expertise. Those who underestimate the real estate and compliance demands of SCIF environments risk stalled growth, lost contracts, and costly operational setbacks.

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Navigating the A&D environment can be challenging — especially when you’re trying to build a strategy that sets your company up for long-term success. Let’s talk through where you are today and where you want to go. With 29 years of experience and more than 6,000 businesses served, vcfo brings practical insight you can put to work right away.