- The Washington Times - Friday, January 24, 2003

The Homeland Security Department's decision to locate in Northwest took local government and commercial real estate officials by surprise, since many had assumed a move to Northern Virginia was imminent.

Congressional and real estate sources said new Homeland Security Secretary Tom Ridge insisted the department be located at the current Naval Security Facility at 3801 Nebraska Ave., after touring sites in Northern Virginia and determining them to be too far away to adequately serve the nation's capital.

"Once they found themselves out in Northern Virginia fighting the traffic, they realized you couldn't be the security agency for the nation," said D.C. Delegate Eleanor Holmes Norton, a Democrat, who had lobbied hard for the agency to locate in the city.

In addition, those close to the situation said Mr. Ridge realized that there were too many questions about the department that still needed to be answered before a major move was made. Big unknowns at the moment include how many employees will be needed in the headquarters, and what security requirements will be.

Several sites in Northern Virginia had been on a short list of locations being considered by the Department. Countless lease proposals were submitted, and a location in Northern Virginia appeared to be a sure thing.

"There was a lot of time and effort put into this … everyone was surprised, nobody saw this happening," said one congressional source.

A site in Chantilly in the Westfields Business Park appeared to be a top candidate, because there is space to expand and it is near the National Reconnaissance Office, which builds and operates the government's surveillance satellites. But homeland security workers complained that it was too far away.

Two sites in Tysons Corner also were also considered, but commercial real estate sources said the Central Intelligence Agency is looking to expand into those buildings.

No decision has yet been made about the permanent home of the department's headquarters. It is, Mrs. Norton said, "way down on the checklist" of things being discussed.

For the time being, Mr. Ridge and about 100 Homeland Security employees will work out of a four-story building on the campus, which sprawls across 38 acres just east of American University. There are 32 buildings on the complex, which are used for the Navy's telecommunications command.

Northern Virginia has not been ruled out as a candidate for a permanent headquarters, and state officials said they will still try to attract the department.

"We've got [more than] 20 million square feet of vacant space, so we can make a good deal," said Rep. James P. Moran, Virginia Democrat. "We've got land and we've got experience dealing with sensitive properties."

Officials in the District and suburbs have been trying to attract the department, citing economic benefits. Mrs. Norton valued the department at more than $30 million per year. But some analysts said the effect of the department would be minimal.

"This is going to be a relatively small office in the context of things," said Mary Peterson, senior vice president at Cassidy and Pinkard, a commercial real estate services firm in the District.

Northern Virginia currently has 24 million square feet of vacant office space. The department, even if it used its initial request of 275,000 square feet, would lower the area's vacancy rate by less than 1 percent, Miss Peterson said.

Some analysts said there could be some positive effect on vacancy rates from contractors looking to serve the department. But, getting close to the department geographically could be difficult. Nebraska Avenue has virtually no commercial real estate available for lease, and the surrounding neighborhood, including stretches of Wisconsin, Massachusetts and New Mexico avenues have an office-vacancy rate of just 7.5 percent, according to Pat McCambridge, a director at USI Real Estate Advisors.

Mr. McCambridge indicated that contractors should begin looking for space now, because supply is limited and the Homeland Security Department might require that all contractors be located within a 15-minute drive.

Also, he said that in previous cases of agencies moving to areas with limited office space, some contractors were forced to pay more than 20 percent above market rates for space.

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