Pentagon agencies renting offices in Arlington County may be moved to military facilities in Md.

Va. landlords caught off base

August 25, 2005|By NEW YORK TIMES NEWS SERVICE

ARLINGTON, Va. -The just-completed One Liberty Center, in the Ballston section of this Washington suburb, was built specifically for the Office of Naval Research. The design included antiterrorism features that added about 25 percent to the cost of the 13-story building, according to the developer.

The huge columns in the garage, for example, are housed in steel plates. The concrete walls are unusually thick, and the laminated windows are not only shatterproof but are anchored to the building by steel rods.

Yet its $10 million in bells and whistles - paid for by the Defense Department - have not protected One Liberty Center from winding up on the Pentagon's base-closing list.

Just nine days before the Office of Naval Research moved into its new offices, the Defense Department recommended moving the research agency, as well as a second tenant, the Air Force Office of Scientific Research, to the National Naval Medical Center, a government complex in Bethesda, Md.

The department also proposed transferring the remaining tenant, the Defense Office of Hearings and Appeals, to Fort Meade, Md.

One Liberty Center is among 102 office buildings nationwide that could lose Defense Department tenants.

In its May 13 announcement proposing that military bases be closed or reduced in size, the Pentagon said it wanted to consolidate its research agencies and "reduce the department's reliance on leased space, which has historically higher overall costs than government-owned space and generally does not meet anti-force protection standards."

The Base Realignment and Closure Commission, an independent panel, is voting in a series of meetings this week on the fate of 837 facilities around the country, including 33 major bases the Pentagon wants to close.

New Defense Department standards, which differ from those for other buildings with government tenants, call for an 82-foot setback. One Liberty Center, which was built according to the security standards in place in 2002, is only 20 feet from the curb, like most city buildings.

"You hate to play the game and find out that they changed the rules," said John G. Shooshan, the chairman of the Shooshan Co., a private company in Arlington that developed the building and is a minority owner.

If the proposals are adopted, Northern Virginia would bear a heavy economic burden. As much as 7.7 million square feet of leased space could empty out and 23,000 jobs could be affected, according to Cassidy & Pinkard, a real estate services company in the Washington area.

The realignment would occur over several years, however, and the General Services Administration would still be responsible for the long-term leases. The base realignment commission has until Sept. 8 to forward its recommendations to President Bush.

Uncertainty over the realignment plan caused Equity Office Properties, the large office landlord, to take two buildings off the market in the Crystal City section of Arlington.

The company with the most at stake is Vornado Realty Trust of New York. The large real estate investment trust is renting an estimated 2.3 million square feet of space in Arlington to the Defense Department, according to Jim Sullivan, a senior analyst for Green Street Advisors of Newport Beach, Calif.

Real estate specialists say the streamlining plan also is likely to ripple through the office market as military contractors search for new offices near their clients.

"That's the wild card in this whole issue," said Margarita Foster, the director of research for Cassidy & Pinkard. Agencies are generally believed to use one outside contract worker for every employee, but the outsourcing ratio in some cases may be as high as 3-to-1, she said.

Sullivan said the loss of so many contracted jobs would be "an anchor that will weigh on that market for years to come."

For Northern Virginia, the threatened vacancies come just as the office market has managed to recover from the technology bust of a few years ago, thanks in large measure to heavy spending by the Pentagon and the Homeland Security Department.

More than half the vulnerable space - about 4.6 million square feet - is in Arlington County, representing about one-seventh of the privately owned office market, and local officials are fighting back hard.

They are being aided by influential politicians, such as Sen. John W. Warner, the Virginia Republican who chairs the Senate Armed Services Committee. The politicians claim Defense Secretary Donald H. Rumsfeld violated the realignment process by basing his proposals on a policy to vacate leased space.

(In response, Glenn Flood, a Pentagon spokesman, said the recommendations were consistent with improving "military value.")

The county also has hired a lobbying group led by William S. Cohen, a former defense secretary, and has proposed other sites with wider setbacks from the street for the research agencies.

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