- The Washington Times - Saturday, December 14, 2002

Locating the Homeland Security Department headquarters outside Washington would not have a crippling effect on the city's economy, as some officials charge, several commercial real estate officials say.
Mayor Anthony A. Williams and Delegate Eleanor Holmes Norton, the District's nonvoting member of Congress, have mounted a campaign to secure the new headquarters, citing a 50-year-old executive order requiring Cabinet agencies to be based in the District.
They say locating the headquarters outside the District would result in a mass exodus of federal workers and a tidal wave of vacant office space, ruining the city's economic base.
But those with knowledge of the area's real estate market say the agency's recent request for space 225,000 to 275,000 square feet does not represent a big chunk of the District's office property.
"Homeland Security is not the government, it's a piece of it," said Keith Lavey, research manager for Grubb and Ellis. "It's not going to destroy the commercial real estate market. It's more of a D.C. pride issue than anything else."
Even if the agency requests additional space to double its current request, it would still have a minimal effect on the District, Mr. Lavey said.
President Bush is expected to make a decision on the organization and location of the new department's headquarters by the end of January.
Initial requests for space indicate the department is looking outside the District, particularly in Northern Virginia, where there is an abundance of office space available for lease. The office vacancy rate there is about 17 percent, compared with just over 6 percent in the District.
In fact, "If Homeland Security wanted to move into the District, there's just not much space available," said Mary Peterson, senior vice president of Cassidy and Pinkard.
Insiders said the department has been somewhat fickle about its transportation needs, first insisting on close proximity to Metro, then asking for space for 1,000 parking spots. Satisfying both requirements will be a challenge, real estate sources said, and it appears that the department has backed off its original desire to be located on federally owned land.
The new department will consolidate 22 federal agencies and about 177,000 workers. But based on the requests for space, only about 1,000 workers would be housed at the actual headquarters. It is not clear as yet which workers will be housed there, and whether new jobs would be created.
Real estate analysts said that Mr. Williams and Mrs. Norton are framing their argument to suggest that a suburban headquarters would force all 22 agencies to move out of the District, leaving more than 4 million square feet of vacant office space.
In fact, industry sources said, most agencies will stay where they are and simply report to administrators at the headquarters.
"They're not going to move everything out and take the whole staff of the agency," said David Lipson, executive managing director for Julien J. Studley in the District.
Real estate analysts did say that District officials have a right to be somewhat concerned. Some agencies may be forced to downsize and move out of some space, particularly if the Homeland Security Department decides to merge certain basic operations, such as accounting.
But, analysts and brokers said, that space can be filled by private companies, which long to be in the District but often can't find available space there.


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