General Services Administration Signs 254 KSF Lease in D.C.

The U.S. Small Business Association is staying put in its digs at the 420,100-square-foot Washington Office Center in Washington, D.C., as the U.S. General Services Administration just entered into a new lease renewal agreement with Vornado/Charles E. Smith for the SBA's approximately 254,300-square-foot headquarters at the office property.

January 10, 2012
By Barbra Murray, Contributing Editor

The U.S. Small Business Association is staying put in its digs at the 420,100-square-foot Washington Office Center in Washington, D.C., as the U.S. General Services Administration just entered into a new lease renewal agreement with Vornado/Charles E. Smith for the SBA’s approximately 254,300-square-foot headquarters at the office property.

“They want to be certain they’re in there, that they’re doing the right thing today that is going to be looked at five years from now as efficient,” Chris Roth, a managing director with Jones Lang LaSalle, told Commercial Property Executive. JLL represented the GSA, while Vornado relied on its internal brokerage staff.

Carrying the address of 409 3rd St. in D.C.’s southwest quadrant, the 22-year-old Washington Office Center sits just above a Metro station. Vornado has owned the complex since 1998, when it purchased the property acquired a 5.3 million-square-foot commercial real estate portfolio from the Kennedy Family for approximately $625 million. With the government agency staying aboard, the nine-story office building will remain nearly fully leased with a 99.7 percent occupancy level.

The GSA, the federal government’s workplace-solutions provider, committed to keeping the SBA in its current home of 20 years for the long term through the signing of a 10-year lease. JLL, however, certainly shopped around and considered all options before the firm and the GSA determined that keeping the SBA at the Washington Office Center would be the best move, so to speak. It is a decision that, Roth said, will be a popular one for federal agencies in the upcoming year. But that’s not the only trend forecasted for 2012.

Consolidations are also on tap. The Department of Homeland Security — which has a headquarters footprint spanning roughly 7 million square feet in 45 separate locations in metropolitan D.C., according to a November 2011 Congressional Research Service — is in the midst of developing a 4.5 million-square-foot campus in the District to bring employees under one roof. It is not a project that will reach completion overnight, so in the meantime, other moves to allow for a more efficient use of space will be made. “There are many leases around the National Capital Region that are going to consolidate,” Roth noted. “The big DHS deal being delayed doesn’t necessarily mean that other consolidations can’t occur. They just may be smaller locations consolidating with one another as opposed to everybody in one place.”

Prospects the government increasing its square footage are dim, yet, an uptick in federal leasing activity is on the horizon. “There are a lot of consolidations and renewals and an emphasis on reducing space, but the activity I think will actually go up in 201,” he said. “Yes it’s more difficult to move, yes agencies are looking to get less space in their subsequent leases but in terms of activity, it will increase.”

The GSA’s leasing habits are changing and will have an impact on the way commercial real estate firms handle the single largest real estate owner in the country. “The workplace strategy initiatives that are going on within the GSA are really starting to gain some steam and real estate firms are starting to help the GSA in their efforts to help their customer agencies with those consolidations,” Roth explained. “There are technology solutions and other solutions that can result in a better workplace and real estate firms are starting to help the GSA with that expertise. The landlords and architects are also getting into it. It’s still real estate — it’s not architecture — but that’s another thing that we’re really starting to see in 2012.”