The U.S. government is pouring tens of billions of dollars into the Navy to build more ships and naval technologies, and one D.C. office submarket stands to benefit.

Government contractors have historically clustered in Northern Virginia, but landlords and local officials in the District see office demand rising from the sector, especially in the Southeast D.C. neighborhood anchored by the Washington Navy Yard and the Department of Transportation.

“What we’re seeing is an incredible influx of new Navy contractors, defense technology contractors coming to the Navy Yard because the Navy is requiring them to have proximity,” Garfield Investments CEO John Mason said last week at Bisnow’s Developing Southeast D.C. event, held at Capital Turnaround.

Garfield in June acquired an office building at 300 M St. SE in the Navy Yardneighborhood for $28M. The building was 53% occupied when it sold, and Mason said at the time that his strategy centered around capturing the increased demand from defense contractors. In August, Garfield landed a 22K SF lease with naval contractor Reliability & Performance Technologies.

Other contractors to move to the neighborhood over the last year include Blue Water Autonomy, a Boston startup building autonomous ships for the Navy that opened an office at an unspecified Navy Yard building in August, and Saalex Corp., which relocated its headquarters from California to D.C.’s Navy Yard with a 2,300 SF lease at 1 M St. SE.