BRAC Activities Spur JV Plan for 4.5M-SF Business Park in Huntsville, Ala.
- Mar 29, 2010
March 29, 2010
By Barbra Murray, Contributing Editor
With the U.S. Department of Defense’s implementation of the Base Realignment and Closure Act of 2005 (BRAC), some military and civilian government workers will be shifting installations, bringing with them increased demand for office facilities in certain locations. To accommodate the impending space requirements near the U.S. Army’s Redstone Arsenal in Northern Alabama, Columbia, Md.-based Corporate Office Properties Trust has created a joint venture with Montgomery, Ala.-based real estate concern Jim Wilson & Associates L.L.C. to develop the 4.6 million-square-foot Redstone Gateway business park in Huntsville.
Redstone Gateway will occupy 468 acres of government-owned land adjacent to Redstone Arsenal. The joint venture has secured a long-term master lease of the parcel under the government’s Enhanced-Use Lease program, which allows private developers to build on underutilized federal property near military bases.
COPT, holding a controlling interest in the project, will serve as the joint venture’s managing partner and will spearhead Redstone Gateway development, leasing and management activities. The business park will ultimately feature approximately 4.6 million square feet of premier office space–1.2 million square feet of which will be secure office space–to be constructed in phases within three- to six-story structures ranging in size from 80,000 square feet to 165,000 square feet. Retail space and hotel accommodations will occupy the complex’s remaining square footage.
As a result of BRAC, Redstone Arsenal’s on-base worker population of over 30,000 will be enhanced by 4,700 military members, civilian government employees and embedded contractors. And where there’s government work, there are government contractors; the off-base pool of contractors is expected to grow with the addition of about 15,000 indirect jobs.
The influx of new government employees and related workers will certainly require a substantial amount of office space in Huntsville, but will Redstone Gateway’s space offerings be too much, or not enough? As it stands right now, Huntsville’s average office vacancy rate is 9.3 percent, up 2 percent from 2008, according to real estate services firm Graham & Co. L.L.C.
“BRAC will be a positive factor in the absorption of office space in all of the major markets in Huntsville,” Jeremy Pope, a vice president with Graham & Co., told CPE. “I believe that the new development coupled with current and future projects in Cummings Research Park and the Downtown office market will be enough in the foreseeable future to accommodate the new square footage requirements.”
A certain confidence regarding the Redstone Gateway endeavor appears to be a common theme among local commercial real estate industry experts. “Over a 10-year period, the developers of the complex will be right on the mark, if they build it in phases,” Jim Michaud, Associate Broker with commercial real estate services firm NAI Chase Commercial, told CPE. “If they jumped right in and built it all next year, it wouldn’t work.”
Michaud concedes that the Huntsville office market, while faring better than many, has not escaped the ravages of the severely hobbled economy, yet he harbors no fears about the imminent onslaught of space. “If you ask me if Redstone Gateway is a good product for Huntsville, for Northern Alabama, for the Army–my answer is, absolutely.”