Uninterrupted by Credit Crunch, Army’s $1B Office Project Kicks Off

While office projects fall off drawing boards across the country, scrapped as a result of the frozen credit market and dwindling demand, Indianapolis-based Duke Realty Corp. is not experiencing any hitches with plans for the development of the U.S. Department of Defense’s 1.7 million-square-foot office complex in the suburban Washington, D.C., town of Alexandria, Va. Duke has just broken ground on the $1 billion project and is on target to complete construction in September 2011, as originally scheduled. The Defense Department’s new administrative office campus (pictured), to be managed by the U.S. Army Corps of Engineers, will sit off I-395 within the 350-acre Mark Center, approximately four miles from the Pentagon and eight miles from Capitol Hill. With 1.3 million square feet of office space in 12 structures, Duke owns most of Mark Center, and in December of last year, sold the Army Corps of Engineers 16 acres for its new office compound. The development will consist of a 15-story office tower, a 17-story office tower, two parking facilities and a public transportation center. The office structures are being designed to meet LEED Silver standards, while LEED Gold certification will be sought for the transportation center. Clark Construction Group is on board the project as designer/builder, and HKS Inc. is the architect. Upon completion, the office campus will become part of the Army’s Fort Belvoir military installation and will host employees relocated from various leased facilities in the Northern Virginia area under the government’s 2005 Base Closure and Realignment Commission Recommendation #133. The project marks one of the largest construction endeavors ever to be undertaken in Northern Virginia, and is all the more significant given that it is moving forward at a time when innumerable office developments have come to a halt or have been canceled altogether. “Actually, we are 1 percent ahead of schedule from the standpoint of delivery,” Peter Scholz, senior vice president with Duke’s Washington, D.C., operations, told CPN. “The downturn of the credit market and the overall economy haven’t had any impact on this project because it’s a pay-as-you-go endeavor. We didn’t have to find financing in the market, so it’s not subject to the current unpredictability of the credit market.” While the Department of Defense’s Mark Center project has not been hindered by the distressed economy, it does have a significant connection to it, at least on a local level. The development will create over 2,000 new construction jobs. Indeed, the federal government is staying on track with its development pursuits, large and small. In December 2008, ground broke on the $724 million San Antonio Military Medical Center construction and renovation project, and in February of this year, work got underway on the 15,000-square-foot Soldier and Family Assistance Center at the $43 million future Warriors in Transition Complex at Fort Campbell in Kentucky. It’s nice work, if you can get it. “A number of general contractors have been able to carve out a nice niche with the government, and I suspect there will be an increase in focus on securing projects with the government,” Scholz said. “However, if you’ve never done it before, it can be an intimidating and daunting mountain to climb. When times were good, there were contractors and developers who didn’t think about pursuing government projects; now, I know they’re considering it. But it’s one thing to consider it and another thing to do it, because the process is so complex.”