- The Washington Times - Sunday, August 25, 2002

Spending increases to fight terrorism, coupled with heightened concerns about building security, are expected to force the federal government to continue expanding its presence outside the District.
The government is the region's largest landlord and a key player in commercial real estate, a cornerstone of Washington's economy.
Surrounding counties will absorb as much as 65 percent of new federal office leases in the next two years, according to a recent study by Delta Associates, an Alexandria real estate research group.
Two forces will drive the expansion, brokers and officials say.
First, some District-based agencies that share buildings with nongovernment tenants are expected to seek space they can have to themselves, figuring it will be easier to secure. Agencies will be increasingly reluctant to share lobbies and parking garages with private-sector tenants, real estate brokers predict.
"Security is a difficult issue. No one wants to create a bunch of bunkers in downtown D.C., but in some cases, the only option may be to look at space outside the District," said Brian Mistysyn, a Delta senior associate.
Secondly, many agencies that already are outside the city, such as the Pentagon in Arlington and the National Institutes of Health in Bethesda, are receiving the biggest budget boosts in the war on terrorism. As a result, those agencies are expected to hire additional workers and lease new offices to house them.
Two agencies helped set these trends in motion.
The Federal Emergency Management Agency canceled plans in December to move into a new headquarters in Southwest Washington. Officials cited "serious security concerns," including the building's proximity to Ronald Reagan Washington National Airport.
The agency has not decided where it will move, but a spokesman said officials are studying other sites in the District. Some brokers speculate that security concerns will force a move to the suburbs and a campuslike setting.
Meanwhile, the National Institutes of Health recently leased 130,000 square feet on four floors in a building near its Bethesda headquarters. The space will provide administrative offices for the National Institute of Allergy and Infectious Diseases, which helps combat bioterrorism.
Federal officials say it is much too early to determine how the war on terrorism will affect the government's real estate needs, pointing out that the war is less than a year old.
"All federal agencies are looking at their real estate options, but what that means for each agency will be different," said Anthony E. Costa, assistant regional administrator for the General Services Administration, the government's real estate arm.

Seeking security
The decision by the Federal Emergency Management Agency, or FEMA, to cancel its new headquarters in Southwest Washington surprised Washington's real estate industry. Some brokers predict it is a signal of things to come.
FEMA was slated to move more than 1,000 employees from 500 C St. SW into Potomac Center, a $220 million complex under construction at Maryland Avenue and 12th Street SW.
The agency's director, Joe M. Allbaugh, said in a prepared statement that top officials changed their minds after September 11.
"My overwhelming concern is for the safety and security of our employees and the ability of the agency to carry out its mission," Mr. Allbaugh said. "We must have a working environment that allows us to respond to disasters and emergencies with a minimum of risk."
FEMA is focusing on other sites in the District, a spokesman said. Privately, some brokers wonder whether the security concerns Mr. Allbaugh cited will lead to a relocation to the suburbs.
Security has become a major consideration for federal agencies, said a real estate broker who has helped the General Services Administration (GSA) find office space for the government.
"September 11 rattled a lot of the conventional thinking," said the broker, who asked not to be identified. "Now the government is looking at parking garages and lobbies, and saying, 'Do we want to share these with people who do not work for us? Do we want to have retail on the ground floor of our buildings?'"
In its current building, FEMA shares an underground parking garage with a Holiday Inn. This is one reason the agency began searching for a new headquarters after the 1995 truck bombing of the Alfred P. Murrah Federal Building in Oklahoma City.
Mr. Costa, the GSA's assistant regional administrator, said agencies will not lease buildings but use only some of the space. "We have very little tolerance for vacant space in the General Services Administration," he said.
FEMA and the Transportation Department are the only agencies near the Mall that plan to move to new headquarters. The Mall is considered a potential target for terrorists.
However, officials hatched plans to move both agencies before September 11. FEMA's search for new surroundings began in the mid-1990s, after the Oklahoma City bombing; the Transportation Department finalized plans this year for a new headquarters along the Anacostia River in Southeast.
Security also is expected to be a factor in the location of the proposed Department of Homeland Security.
President Bush has urged Congress to merge all or parts of 22 agencies including the Coast Guard, the Immigration and Naturalization Service, the Transportation Security Administration and FEMA to create the Cabinet-level department.
It would employ 170,000 workers and have an annual budget of $34.7 billion.
It is too early to discuss where the Department of Homeland Security might be based, a GSA spokesman said. The agency would need roughly 250,000 square feet, and many brokers think it is likely to set up shop in the suburbs.
"If they want a campus setting, it's unlikely they could do it in the District. They will more than likely have to look at Northern Virginia," said Mary S. Petersen, senior vice president and director of market analysis for Cassidy & Pinkard Inc., a D.C. brokerage.
Some brokers say the homeland security agency could locate at Southeast Federal Center, a 55-acre compound where the Transportation Department is building new headquarters. A building at 20 Massachusetts Ave. NW, where the Justice Department and the Immigration and Naturalization Service lease space, also is mentioned as a candidate.

'Disaster space' sought
The need to set up a so-called shadow government also is expected to force the government to expand into the suburbs.
Some agencies seek "disaster space" for computer equipment and backup operations in case of a terrorist attack or other calamity in Washington, brokers say.
One Cabinet-level department has such a site in Northern Virginia, said a spokesman, who asked that the agency not be named.
"We have identified this as space we need to continue to operate in case of an emergency," the spokesman said.
The site is furnished and can accommodate 50 senior staffers, including the secretary, the spokesman said. One or two staffers work at the emergency site on a permanent basis.
The office is part of the department's "continuity of operations plan," a blueprint for how to keep functioning if the D.C. headquarters is compromised.
D.C. Delegate Eleanor Holmes Norton, a Democrat, said she is not aware of other agencies that want to set up similar disaster sites outside the District. GSA officials said the same.
"I can't find the slightest trace that this is going to be a trend," said Mrs. Norton, the city's non-voting representative and a member of the House Government Reform Committee, which oversees government real estate.

Suburban growth
No one is predicting an exodus of federal agencies from the District to the suburbs.
Mrs. Norton and other officials have put enormous political pressure on federal agencies to remain in the District, citing the government's importance to the city's economy.
Also, many federal officials say they like being close to the seat of power and have no desire to leave.
Nevertheless, much of the government's real estate growth since World War II has been outside the District. Several key agencies have grown up outside the city, among them the Defense Department in Arlington, the NIH in Bethesda, the Food and Drug Administration in Rockville, the National Security Agency near Fort Meade, Md., and the Central Intelligence Agency in Langley.
In the past 20 years, the amount of federal office space in the suburbs has grown faster than the amount in the city.
Between 1981 and 2001, federal office space in the District jumped from 32 million square feet to 50.6 million square feet, a 58.3 percent increase, according to Delta Associates.
The amount of federal space in the Maryland suburbs during this period doubled, from 7 million square feet to 14.2 million square feet, Delta said.
In Northern Virginia, the amount of space grew from 14.1 million square feet in 1981 to 23.2 million square feet in 2001, a 64.8 percent increase, Delta said.
Together, the increases of 7.2 million square feet in Maryland and 9.1 million square feet in Virginia are less than the growth of 18.6 million square feet in the District.
"The District is not going to lose its function as the corporate headquarters of the federal government," said Stephen S. Fuller, a George Mason University public-policy professor who helped Delta compile its report on federal real estate trends.
From "a big-picture perspective," the government's growth benefits all area jurisdictions, Mr. Fuller said. "The federal impact on the Washington region is enormous. Everyone benefits from that," he said.

D.C. property expensive
Not all agencies are expanding outside the District because of the war on terrorism.
The Federal Deposit Insurance Corp., the government-owned corporation that insures banks, announced in March that it will vacate four leased offices in the District, moving 1,100 employees to Arlington.
Money is the chief reason for the move, the FDIC says. It's generally cheaper to own than to rent, and by building offices in Arlington, it expects to save $78 million over the next 20 years.
The FDIC will build a $111 million, 422,000-square-foot addition to its Virginia Square campus at 1001 N. Monroe St., where it has a 370,000-square-foot building and training center.
It will maintain its headquarters in the District at 550 17th St. NW, near the Old Executive Office Building.
"It is a matter of economics. We are consolidating in Northern Virginia, but we will continue to maintain a significant presence in the District," said Michael Rubino, the commission's associate director for corporate services.
Meanwhile, two District-based agencies the Bureau of Alcohol, Tobacco and Firearms and the Securities and Exchange Commission announced plans to build new headquarters in the city after flirting with the idea of moving to the suburbs.
The SEC considered moving to Silver Spring in 1995, igniting a battle between the District and Montgomery County.
Ultimately, the agency bowed to political pressure and stayed in the District. It put its headquarters search on the back burner until last year, when it signed a 14-year lease for a building under construction near Union Station.
"This is an agency that looked at everything. This is a very large agency, and the city was able to accommodate them," said Audrey Z. Cramer, executive director of Cushman & Wakefield, a brokerage that helped put together the commission's deal to move near Union Station.
In April, the Bureau of Alcohol, Tobacco and Firearms broke ground on a new headquarters at the corner of New York and Florida avenues NE. The 422,000-square-foot building will house about 1,100 employees.
Both deals are significant because they represent the government's reinvestment in the District, Mrs. Norton said. She said similar deals are likely.
"What we've seen is what we've always seen and what we are going to continue to see: People want to be close to 1600 Pennsylvania Avenue and the Congress of the United States. That's never going to change," she said.

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