Image courtesy Wikipedia user Wyn Van Devanter

The U.S. General Services Administration has selected the Trump Organization as its preferred team to handle a $200 million redevelopment of the Old Post Office building and annex in Washington’s Federal Triangle neighborhood, the GSA announced Tuesday. Under the Trump Organization’s proposal, the Old Post Office will, perhaps unsurprisingly, be converted into a luxury hotel with more than 250 rooms, upscale restaurants, a spa and conference facilities, while still preserving the building’s Romanesque Revival architecture.

Under the RFP, GSA and the Trump Organization will spend the next year negotiating a detailed redevelopment agreement that will specify usage, historic-preservation requirements and the federal government’s revenue stream. In the meantime, GSA will relocate the building’s current federal tenants, which include the Advisory Council on Historic Preservation, National Endowment for the Arts and National Endowment for the Humanities.

If negotiations proceed as expected, redevelopment is expected to start in 2014, with occupancy in 2016. At the end of the lease, control of the building will revert to the federal government.

Built between 1892 and 1899, the Old Post Office was already considered old-fashioned when it opened. The D.C. Mail Depot was moved to a larger building in 1914, and in the 1920s the Old Post Office faced demolition.

A lack of money during the Great Depression kept the building open, but in 1964 a federal commission recommended taking the building down. Though demolition permits were issued, historic preservationists fought for the building. In 1973 it was added to the National Register of Historic Places, and an extensive renovation began in 1976.

A generation later, the building had outlived its usefulness as federal office space, and Congress directed GSA in 2008 to enter into a long-term lease under Section 111 of the National Historic Preservation Act, thereby guaranteeing the restoration and retention of all of the building’s historic features, while allowing the private sector to determine how to develop it to its fullest potential.

Although redeveloping historic properties is often perceived as a niche activity, GSA is currently involved in several such projects.

One is in Grand Junction, Colo., where in February 2011 the agency announced plans to turn the 92-year-old Wayne Aspinall Federal Building and Courthouse into the nation’s first net-zero energy usage building on the National Register of Historic Places.

If the redevelopment meets its goals, the building will in the course of a year produce as much energy as it consumes. The project is also aiming for LEED Platinum certification. GSA will install a geothermal heating/cooling system that uses the warmth or cold of the ground to help control temperature. A solar panel array is projected to generate enough energy to balance out the building’s electrical demand.

After the project is completed in January 2013, nine federal agencies will take space in the Aspinall Building.

A vastly bigger GSA historic-redevelopment project is getting under way in D.C.’s southeast quadrant, where a former mental hospital overlooks the Potomac and Anacostia rivers.

The creation of the Department of Homeland Security was the largest restructuring of the federal government since the creation of the Defense Department. Similarly, the $3.4 billion St. Elizabeths project, which will be DHS’ new home, is the largest federal construction project in metro Washington since the Pentagon was built during World War II. St. Elizabeths was established by Congress in 1855 as a government hospital. Currently, the 118-acre east campus is owned by the D.C. government, and the 182-acre west campus is owned by the federal government.

Ground was broken in September 2009 on the new 1.2 million-square-foot headquarters of the U.S. Coast Guard, which is scheduled for completion in 2013. The $450 million building is being funded under the American Recovery and Reinvestment Act of 2009.

Most of the St. Elizabeths project, however, will involve adaptive reuse. GSA will preserve 51 of the 62 buildings on the west campus, while incorporating many sustainable elements. For example, about 80 percent of the roof area on the new buildings will be green. GSA’s goal is to achieve LEED Gold certification.

BioMed Realty Trust Inc.’s presence in the Boston/Cambridge life sciences market will soon surpass 3 million square feet, now that the life sciences real estate REIT has entered into an agreement to purchase the 287,000-square-foot Cambridge Place in Cambridge, Mass. The property comes with a price tag of $119 million.

“The Cambridge life science market is what we think is the preeminent market in the world really,” Rick Howe, director of corporate communications with BioMed, told Commercial Property Executive. “There are a large number of life science companies and organizations that are looking for space — some office, some lab — and we want to be able to handle both types of users’ requirements in the market.”

Cambridge Place consists of three structures and is presently 80 percent occupied. Heading up the tenant roster are Idenix Pharmaceuticals Inc. and engineering and construction firm CDM Smith Inc., which has called the property home since the complex’s first building, One Cambridge Place, opened its doors in 1998.

The life sciences market in the Boston/Cambridge area is booming, so prospects for leasing up the remaining space at Cambridge Place and other industry-related office and laboratory properties are positive.

“The demand is strong,” Angus G. McQuilken, vice president for communications with the Massachusetts Life Sciences Center, told CPE. “Massachusetts continued to lead the nation in biotech-related construction in 2011 and that’s a trend we expect to accelerate in 2012.”

The U.S. is home to some of the world’s leading life-sciences clusters. New York/New Jersey, the San Francisco Bay Area and San Diego are among them, but Boston leads the pack, as per statistics from commercial real estate services firm Jones Lang LaSalle. And industry experts believe the Boston/Cambridge area will continue to lure life sciences businesses for the foreseeable future.

There are a few big reasons why the area is such a draw for life sciences companies ranging from large global corporations down to small entities and startups. “Companies are locating here and expanding here because they want proximity to our world-class academic institutions, our R&D, and they want proximity to partners in the industry and you’ll find all of the major global players in life sciences here in the Massachusetts cluster,” McQuilken said. “Also, they’re looking for talent. The talented workforce is the number one reason why companies choose to locate here. Then there’s the government role. Massachusetts’ 10-year, $1 billion life sciences initiative continues to be a magnet for private investment.”

Alas, the call for life sciences office and laboratory space accommodations is only going to grow louder. The average occupancy level at these properties is in the 13 percent range, according to a recent report by Richards Barry Joyce & Partners, but numbers can be deceiving. “One of the top biotech real estate concerns going into 2012 is the lack of tenant choice in the market and resulting constrained growth,” Brendan Carroll, senior vice president of research for Richards Barry Joyce & Partners, noted in a statement on the report. “It’s the downside of having such a strong biotech cluster in the region.”

A few sizable recent deals involving federal, state and county government agencies as office tenants has been trending of late, and Commercial Property Executive wanted to know more. With the severe budget cuts, and in many cases outright downsizing, hitting all levels of government, are government tenants as desirable to office building managers and owners as they were pre–Great Recession?

Conversations with brokers who specialize in such tenants indicate that although government agencies are not loved less these days, office landlords will continue to see less of them to love. Reductions in the sizes of government agencies, compounded by a push to use less space per worker, mean that, although these agencies remain credit tenants, their space requirements will in many cases shrink significantly.

Ripples into Waterfalls

“I’ve never seen the federal government under so much pressure from so many angles,” says Chris Roth, managing director and national project manager for Jones Lang LaSalle’s National Broker Contract, where he works primarily with the General Services Administration and other federal agencies. This pressure is coming both from Congress and from within individual agencies, he says.

“There is this move toward rationalization of costs” at various levels of government, and real estate is part of that, agrees Vineet Sahgal, executive vice president of Tenant Advisory Services for Transwestern.

For example, he says, pressure is being exerted on government to get its office use metrics in line with private-sector standards. One upshot is what Sahgal describes as “a more fluid situation” for governmental office tenants than in past years.

The prolonged recession isn’t causing a ripple effect, “it is a waterfall effect” on governments, says Kurt Little, a managing director at Jones Lang LaSalle, Chicago, who works exclusively with state, county and local governments nationwide.

Saving money is more of a priority now than ever for public entities, he says, and states are looking to cut costs by reviewing their entire real estate portfolios and downsizing as advisable. By and large, states “took longer to make tough decisions” about real estate than the private sector did, Little says, and are now trying to catch up.

Roth adds that the states often lag the federal government in having the data to identify all the space in their portfolios, but that once that has been pulled together, the effects will be seen in lease negotiations and transactions.

Substantial Cuts

So that’s the “why,” now for a look at the “how” and “how much.”

Little says that a 10 percent saving in space from restacking is “nearly a slam-dunk,” with up to a 30 percent reduction possible in some cases. These space savings come from such changes as decreasing the numbers of private offices, conference rooms, and copiers and printers a government tenant has.

“It’s a methodical process,” Little says, and typically takes 12 to 36 months.

Because government agencies are looking at tactics like new layouts, more efficient furniture and hoteling, says Roth, landlords these days are concerned that a government tenant will come back with proposal for 10 percent to 30 percent less space.

“If anything makes them less desirable” as tenants, Roth says, “it’s that.”

He adds, however, that in some cases, if their headcount projections are uncertain, agencies are looking for the flexibility to grow during the lease term. For this and other reasons, Roth says he wouldn’t be surprised to see shorter lease terms for governmental tenants, with fewer 15s and more fives, sevens and 10s.

On an even more strategic level, Little says, governments are carrying out occupancy assessments, evaluating issues such as leasing versus owning. He notes that although governments can be tempted to focus on selling surplus real estate, there’s usually greater long-term value from optimizing day-to-day operating costs like utilities and janitorial services.

Many county and state agencies, Little says, are spending twice as much per square foot on office space as a typical private-sector tenant.

Still Looking Good, Regardless

Because of regulatory changes and/or shifts in government’s role, Sahgal says, government demand for space fluctuates in ways that aren’t necessarily in synch with the rest of the economy. He cites as an example the establishment and growth of the Department of Homeland Security.

Some investors, he says, therefore see government-leased space as a business cycle–neutral play, although this can depend on the specific agency. The IRS, for one example, Sahgal guesses, is unlikely to be shrinking.

And if governments these days are more interested in sale-leasebacks, he says, there’s “a whole swath of investors” looking for such fully leased buildings. Even if a government entity were to vacate such a building, Sahgal says, a CBD location would still be a viable investment.

(Sahgal does mention one unique aspect to government office tenants. Some private-sector tenants dislike co-locating with certain governmental offices, such as the IRS, state or federal law enforcement agencies, or state unemployment agencies, because of the potential for business disruption from the occasional bomb threat to the building. It happens.)

Federal agencies are still credit or better-than-credit tenants, concludes Roth, and they still have plenty of negotiating leverage just because of their sheer size.

And that’s also true at the state level. One state client of Little’s will be vacating about 30 percent of a building they currently lease all of, and he’s confident that their new lease will nonetheless be for a lower rate.

“The federal government negotiates very aggressively,” says Roth. “They benchmark commercial rates,” which creates “marks on the wall” for companies like JLL.

“They’re pretty cutting-edge on that stuff,” he adds. “As a taxpayer, that’s good to hear.”

Continuing the trend of a high transaction volume in the Texas markets, Core Real Estate and BayNorth Capital Inc. have sold The Plaza at Enclave to an affiliate of Azrieli Group, a real estate development and investment company located in Tel Aviv. Holliday Fenoglio Fowler L.P. marketed the property on behalf of the sellers and arranged financing for the buyer through Cornerstone Real Estate Advisers, an investment subsidiary of MassMutual.

Dan Miller, a senior managing director with HFF, called The Plaza “one of the finest office buildings, if not the finest, in West Houston,” after the transaction closed. The building was completed in 2008 and is currently 100 percent leased to Dow Chemical Corp. as its regional headquarters as well as to Ridgewood Energy, Petrofac and HRT America. The six-story, 344,295-square-foot Class A property is situated on eight acres of property and has LEED Gold certification.

Houston, which weathered the economic downturn better than most other metro areas in the United States, has been in the news quite a bit recently. Just yesterday, the city saw the signing of a 4.2 million-square-foot leasing-and-management contract signed by CBRE Group Inc. for the five buildings in the Houston Center complex. Last week, Cassidy Turley picked up a 2.5 million-square-foot management contract in Houston and Dallas. And, after signing a 358,100-square-foot lease at 1 Houston Center in late January, plastics and chemical manufacturer LyondellBasell saw the building renamed for the firm.

According to a fourth-quarter 2011 report by services firm Cushman & Wakefield Inc., Houston turned a corner last year by regaining all jobs lost in the recession. The office market, specifically, mirrored the overall economic climate in the city, with falling vacancy rates citywide and an increase in rent levels. “The outlook for Houston’s office market will closely follow the path of job creation in the city,” the report noted. “With a strong forecast of around 3 percent job growth in 2012, absorption is likely to be again be positive in 2012.”

A rendering of the renovations at 680 Folsom St.

Riverbed Technology, an IT firm in San Francisco, has just found itself a new home. Courtesy a transaction handled by TMG Partners and financial partner Rockwood Capital L.L.C., the firm just signed a 167,788-square-foot lease at 680 Folsom St. in the city’s SoMa district. Riverbed, which currently sits at 199 Fremont St., will move into the second through sixth floors of the soon-to-be 522,000-square-foot, Class A space with a 10-year lease term. Jones Lang LaSalle Inc. represented the tenant in the transaction.

The move was precipitated by both Riverbed’s increase in space needs – the firm pulled in more than $550 million in 2010 revenue despite being founded as recently as 2002 – but also due to 680 Folsom’s current $87 million renovation project. The modernization, which also extends to the adjacent three-story building at 50 Hawthorne St., is set to complete in 2013 and includes an increase of more than 100,000 square feet of space.

San Francisco’s mayor, Ed Lee, called the move a “successful real estate transaction that will create jobs and drive innovation in our city.” And, according to a fourth-quarter 2011 report by JLL, the tech sector is leading the way in that regard. Leasing activity exceeded 9.5 million square feet last year, and technology firms represented 35 percent of that total – with high-demand areas such as Mission Bay / China Basin and SoMa districts garnering the largest Class A asking rents in the city, at $56.69 and $54.00 per square foot, respectively.

“We’re making this investment to support our long-term growth and cement our commitment to the city of San Francisco, Jerry Kennelly, Riverbed’s co-founder & CEO, said. “We think the city is the right location to attract the best talent and provide a thriving environment for our current employees.”

“High-tech industry growth during 2011 drove the best market performance in more than a decade,” the JLL report noted. “Some are raising concerns about the market trajectory and depth of high-tech based demand. Data indicate more growth ahead and another strong year in 2012, but posting numbers achieved in 2011 may prove challenging considering the lack of expansion from other industries and the amount of new supply expected to enter the market.”

J.P. Morgan Asset Management has turned over to CBRE Group Inc. the property management and leasing of five buildings totaling 4.2 MSF in the Houston Center complex on the east side of downtown Houston, CBRE announced yesterday. J.P. Morgan acted on behalf of institutional investors it advises. The five buildings are Class A office buildings 1 Houston Center, 2 Houston Center, Fulbright Tower and 4 Houston Center, as well as retail-based The Shops at Houston Center.

Built between 1974 and 1984, Houston Center helped revitalize the east side downtown area, eventually encouraging the development of other large-scale buildings such as Minute Maid Park, Toyota Center, Discovery Park, Hilton Americas Hotel and Hess Tower.

CBRE provided Commercial Property Executive with additional particulars on the individual buildings. One Houston Center/LyondellBasell Tower, located at 1221 McKinney St., spans 1.1 million square feet across 46 stories. It was built in 1978 and is 93.9 percent leased. The building was renamed LyondellBasell Tower late last month after a lease extension by the Dutch-headquartered multinational chemical company.

Two Houston Center, located at 909 Fannin St., spans just more than 1 million square feet across 40 stories. It was built in 1974 and is 91.7 percent leased. Fulbright Tower — formerly Three Houston Center — is located at 1301 McKinney St. and spans 1.25 million square feet across 51 stories. It was built in 1982 and is 86.8 percent leased. The named tenant is Fulbright & Jaworski L.L.P., one of the 50 largest law firms in the country. The final office building, Four Houston Center, is located at 1221 Lamar Ave. and spans 674,000 square feet across 16 stories. It was built in 1983 and is 91.5 percent leased.

The retail component, The Shops at Houston Center — formerly known as Park Shops — is located at 1200 McKinney St. It spans 200,000 square feet. The Shops was built in 1982 and heavily renovated in 2003; it now stands at 80.4 percent leased. As is typical of downtown, service-center retail, it has no large anchors, instead mostly convenience and lunch-oriented tenants.

According to just-released figures from the Greater Houston Partnership, the city led Texas in job growth last year, accounting for one of every three jobs created in the state. The 10-county Houston area added 75,800 jobs, a 3.0 percent increase in metro-area employment over the previous year.

An artist's rendering of the Air Rights development.

Cassidy Turley becomes part of a landmark development in Washington, D.C., with Property Group Partners’ selection of the firm to serve as the exclusive leasing services provider for the I-395 Air rights Development. The premier mixed-use project, which will be erected on a platform above I-395, will produce 2.2 million square feet of commercial space with a focus on office accommodations.

“It’s going to have retail, it’s going to have restaurants, it’s going to have roof decks,” Art Santry, senior managing director with Cassidy Turley, told Commercial Property Executive. “It’s going to have everything that you’d ever want to have in an office environment.”

I-395 Air Rights will span three city blocks, sprouting up on what is the largest contiguous undeveloped site in downtown Washington, D.C. But it’s not your typical site. While the project’s five buildings will be anchored on terra firma, its pathways and roads will be above it all, above the Center Leg Freeway of I-395, to be precise. “You’re creating a space, you’re creating seven acres of land that don’t exist and that’s pretty unique,” he said.

The project’s office offerings will include four 12-story structures, among them, the 546,700-square-foot, tower at 250 Massachusetts Ave.; 200 Massachusetts Ave., featuring 407,000 square feet; the 297,300-square-foot 201 F St.; and 200 F St., a 685,400-square-foot building.

The development will also encompass a residential tower, the 180,400-square-foot, 13-story building at 600 Second St., as well as ground level retail and thousands of parking spaces. Additionally, I-395 Air Rights will be able to lure occupants with what has become a coveted feature for tenants: LEED Platinum certification by the U.S. Green Building Council.

Cutting-edge technology, top-of-the-line amenities, and buildings designed by prominent architects — as Kevin Roche John Dinkeloo & Associates, Kohn Pedersen Fox Associates and Skidmore, Owings & Merrill — will distinguish the project, as will another major factor. Size. Size does matter, and I-395 Air Rights will have it. Businesses seeking large accommodations and room for growth will be able to find a home there. Today, such users have limited options in the city. At the close of 2011, according to a Cassidy Turley report, there was only one new property with a large contiguous block of space available: the Capitol Hill submarket’s 414,200-square-foot building at 1015 Half St., where approximately 200,000 square feet is up for grabs.

The first office building at I-395 Air Rights could come online in roughly three years. In the meantime, tenants seeking anchor spaces can make their needs known to Cassidy Turley — and have them met. “We can modify the design, nothing is set in stone,” Santry affirmed. “Property Group Partners has been very specific about that. They’ve made it clear that, ‘Hey, we’ll do what the market demands.’”

And the demand, he believes, will certainly exist when the massive, multi-phase project, makes its debut. In the last few years, the Washington, D.C., office market has been buoyed by government agencies’ growth and their accompanying need for additional space. However, the government is unlikely to be a lead tenant at the state-of-the-art development. “Given the rental rates for this asset, it’s hard to make the government wok on this site, because the government has a ceiling on rent. It’s not our initial marketing focus.”

Service companies, medical industry businesses and law firms are the practical target market. “Twenty-five years ago, a big law firm deal was 100,000 or 150,000 square feet and that was a monster deal,” Santry explained. “Now they’re 350,000 and 400,000 and if you look at the average building in Washington D.C., it’s 200,000-plus square feet. So if you’re a big law firm it’s hard to get under one roof. The buildings at this development can provide a campus. It’s not crazy to think that a law firm will be 500,000 or 600,000 square feet in 10 years. So we can say, ‘Here’s your campus,’ and that is pretty unique.”

And with a low level of new product scheduled to deliver in the near future, demand is on track to increase in what is already one of the best-performing office markets in the country. According to the Cassidy Turley report, currently, new supply in the District is at its lowest level since the late 1990s and construction completions will likely remain light. It appears that I-395 Air Rights’ office towers will stand out, literally and figuratively. “They will be very high-end, forward-thinking, sustainable buildings,” Santry said. “The quality will be second to none.”

*This story was updated at 8:45 a.m. EST on Feb. 7, 2012.

The current generation of U.S. embassies and their related support facilities are designed to physical and technical security standards in keeping with the unfortunate state of elevated and unpredictable threat levels we all live with to one degree or another in today’s world. Most of the technical parameters relating to security design are considered sensitive if not classified information, but there is a great deal of what we do in designing the modern embassy that is universally applicable and transportable back to the United States—not only for new domestic federal government facilities but even for the general commercial markets.

This is not to suggest that once the development markets return we can expect to routinely see blast-resistant hardened structures, anti-terrorism/force protection-rated window and door assemblies, chemical-biological threat mitigation in the mechanical systems or the ability for full functional operation off the grid, as is the case with our new embassy compounds. But the wise developer or commercial building owner should give more than a passing nod to how new facilities could be planned to respond as needed to a set of circumstances not given much consideration in years past.

In the Washington, D.C., metro area and other cities across the country where the federal government maintains a sizable leased office presence, this connection is obvious. As governments in general shift from owned to leased space (or space that is procured via competitive design-build-leaseback or -sale deals), enhanced security is bound to prevail in the lease criteria. Prescribed stand-off distances from uncontrolled vehicles, site-perimeter access control, glass-retaining film membranes and structural progressive-collapse preventive design are already staples of most new federal office facilities, regardless of who owns them or where they are located.

As the line between traditional government employees and outsourced operations blurs, this criteria is extending into the government subcontracting market, thereby potentially encompassing a much greater number of facilities across the country. (For a more complete description of current domestic federal government design criteria, go to the U.S. General Services Administration Web site and download The Site Security Design Guide. More detailed information is available in the GSA Public Buildings Service P100 Facilities Standards.)

The evolving threat is not only related to the increasing interest in reducing the number of soft targets available to terrorists but to industrial espionage. Given the sheer number of possible targets, it may be hard to imagine a terrorist striking at your heartland commercial office building. However, it should not be so hard to imagine a startup technology tenant shopping leases or build-to-suits on the basis of how their options compare from a securability perspective.

Despite the fact that general crime and vandalism continue to be social ills present virtually everywhere, designing in the ability of buildings and their sites to help offset such a threat seems to be a lost art. Most of the last generation of architects encountered Oscar Newman’s Creating Defensible Space somewhere in their academic careers—pretty basic stuff about not designing unsupervisable spaces as potential settings for bad things to happen—but how often today is a commercial office building design evaluated with this in mind prior to finalization? (Newman’s book, which largely applied to new housing developments, is a free download from the U.S. Department of Housing and Urban Development Web site.)

Take the typical suburban office park. The smart developer will direct its architect to test the proposed building siting for stand-off clearances from property boundaries and vehicles. Sometimes, sites are sized such that with plan adjustments a building can be positioned in accordance with anti-terrorism guidelines. But this is not usually the case. The crush is on to provide as much surface parking as possible, but in siting the building and configuring the parking, wouldn’t it be wise to do so in a way that would sacrifice only one parking bay instead of two if at some point that stand-off distance were to become critical?

Certain corporate office users took such an approach in the 1980s, when they realized that new facilities needed to be planned with an exit strategy in mind: no more sprawling corporate palaces; instead, they sought to include entrances and building core layouts that would facilitate potential subleases. Today, in addition to exit strategies, we think about security strategies.

And regardless of the perceived potential for future tenants seeking facility security criteria, it is good sense to design main entrance lobbies such that the access control station has a clear line of site to both entrances and elevators. A little foresight in running empty conduit to floor outlets is a relatively inexpensive way to accommodate card readers and turnstiles in lieu of multiple manned guard stations. The same applies to potential camera locations inside and out in order to avoid tearing up expensive finishes for retro-installations. As for the beloved covered drop-off, a few strategically placed, attractively clad bollards designed to anti-ram standards could prevent a tragedy caused by a disgruntled employee—or a stuck gas pedal.

We work very hard in the design of U.S. embassies to make the security measures as unobtrusive as possible. With the softer applications we are proposing for commercial buildings, that goal is even more readily attainable. A bit of forethought can provide for more occupancy options down the road, while offering a degree of enhanced safety in the meantime.

James M. Wright, AIA, and Thomas McCarthy, AIA, LEED AP, are principals with the architectural and engineering firm Page Southerland Page L.L.P. Just prior to the prolonged economic retrenchment that has so negatively impacted the commercial real estate development markets, the Washington, D.C., office Wright and McCarthy lead found exceptionally fertile ground as the design partner in U.S. federal government design-build contracts. The greatest volume of this work has been through the Department of State’s Office of Overseas Building Operations’ capital security construction program. They are currently working on the design of their 20^th diplomatic compound since 2002—in all totaling about $2.5 billion in design-build contract value.

Fully leased premier office properties continue to be at the top of buyers’ list and Wells Core Income REIT has just added one such asset to its portfolio. The REIT recently acquired Franklin Center, a 200,600-square-foot office building in the Baltimore submarket of Columbia, Md., from Principal Real Estate Investors.

In addition to being occupied in its entirety by a creditworthy tenant, scientific and technology applications company SAIC, Franklin Center is also new — and green. The seven-story building made its debut in 2008, and it has earned LEED Gold certification by the U.S. Green Building Council.

The length of SAIC’s lease is unclear; however, Wells Core REIT should not have too much of a challenge maintaining a full tenant roster at Franklin Center should SAIC depart. The property, located near Fort Meade and the U.S. Department of Defense’s U.S. Cyber Command, sits in an area where the prospect for long-term demand for office space is on the rise. It has everything to do with jobs.

“Driven by numerous expanding industries, the Greater Baltimore area is ahead of the curve when it comes to market stabilization,” a report by commercial real estate services firm Cassidy Turley noted. “Market conditions should start to show signs of improvement with the influx of more than 15,000 jobs due to the DoD’s Base Realignment and Closure of 2005. The National Security Agency’s increased hiring efforts to support its cyber security initiatives should also have a positive economic impact on the area.”

Fountain Place in Dallas

Building on its “longstanding relationship with J.P. Morgan,” services firm Cassidy Turley has just landed a contract to lease and manage 2.5 million square feet of office space owned by the banking firm’s institutional investors. The assignment will span two properties: Dallas’ 1.2 million-square-foot, 60-story Fountain Place and Houston’s three-building, 1.3 million-square-foot Post Oak Central. J.P. Morgan Asset Management awarded the contract to Cassidy after a bidding process that was opened up to a number of firms, but signed the final arrangement within 60 days, Commercial Property Executive has learned.

“As a firm, we work with J.P. Morgan on multiple accounts,” Bret Bunnett, regional managing principal with Cassidy, told CPE. “And we are expanding our relationship with J.P. Morgan in a significant way with these two assignments.”

Fountain Place, at 720 feet, is the fifth-tallest building in Dallas. Its current tenant roll includes Hunton & Williams, L.L.P., Wells Fargo Bank, and Tenet Healthcare Corp. According to Bunnett, the property is 90 percent leased. Post Oak Central, which is 94 percent leased, houses Apache Corporation – which signed a nearly 600,000-square-foot lease renewal and extension earlier this week – Suez Energy North America Inc., Stewart Title and and Cox Radio.

Texas, as a whole, has fared well during the economic downturn of the last few years. According to a fourth-quarter report by services firm Marcus & Millichap Real Estate Services Inc., Houston will lead the nation in job growth in 2012, with employers adding 87,000 jobs for a 3.4 percent increase in employment levels. “Houston [led] the nation in hiring through the first three quarters [of 2011],” the report noted, “followed by nearby Dallas/Fort Worth.”

“We expect these buildings will continue their history of success,” Bunnett said. “We’re poised to take Fountain Place to at lease 96 percent [occupancy] and Post Oak all the way to 100.”

This contract brings Cassidy Turley’s Texas office management holdings to approximately 22 million square feet in Dallas and Houston alone.