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Posted at 06:42 PM ET, 09/16/2011

Why selling city office buildings is dumb


Is the $300 million or more the city could get for this building worth it? (D.C. Department of Real Estate Services)
I didn’t get a chance earlier this week to give Harry Jaffe’s Tuesday Examiner column the debunking it deserves.

He supports an idea favored by D.C. Council member Jack Evans (D-Ward 2), whereby the city sells several of its downtown property holdings in order to cash in on strong real estate prices. Evans wants the city to look at selling the Frank D. Reeves Center at 14th and U streets NW; the Recorder of Deeds Building at 6th and D streets NW; the Henry J. Daly Building (aka police headquarters) at 4th Street and Indiana Avenue NW; and One Judiciary Square across the street.

Jaffe, in particular, favors selling One Judiciary Square, which, he notes, “sits right on top of the Metro, a short walk to Capitol Hill and the courthouses.”

The building would likely sell for several hundred million dollars. ”Salting that away into savings would bring the fund balance back over $1 billion,” Jaffe writes. “City bureaucrats would get a new building. Cranes would get busy. The new owner would pay taxes.”

So there are few immediate problems with this idea. Where would the many, many workers in that building go instead? Assuming they go into leased space, what would that do to the city’s operating budget? And where would the city find enough square footage for a decent price?

”You’d be exposed to more risk, and where would you go?” asks Robin-Eve Jasper, director of the city real estate department under former Mayor Adrian M. Fenty (D).

Under Jasper and her predecessors, the city’s been on a mission to reduce the amount of leased space it occupies, not increase it. Leased space means less management burden for the city, but it’s expensive and risky, and the process of entering into leasing arrangements has been fraught with political meddling or worse.

Jasper said that of the four buildings Evans identifies, One Judiciary Square and Reeves make the least sense to sell because they are the largest and newest and full of city tenants and would be the hardest to replace on the leasing market. The Recorder of Deeds and Daly buildings, she said, are better candidates, and the city has explored public-private partnerships for redeveloping them.

By  |  06:42 PM ET, 09/16/2011

 
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