President Obama and members of Congress from both parties are working to close Fannie Mae and Freddie Mac, which for the District and Fairfax County could mean the dissolution of two major corporate campuses and employers in an already flat office market.
Members of the House and Senate have begun working on bills that would replace the organizations with different frameworks for backing up traditional mortgages. Neither proposal is close to becoming law, and a winding down of either organization could take years.
But in Washington, which long enjoyed unhindered growth in federal facilities, fueling the commercial real estate market, the prospect of losing the two agencies has already begun registering for owners of office buildings and development projects.
Freddie Mac’s headquarters are in 800,000 square feet of offices on a 38-acre campus on Jones Branch Drive in Tysons Corner that was developed in partnership with former McLean developer WestGroup. Should they begin to empty in coming years, it could further darken a bleak outlook.
“We sure as hell don’t want another million square feet dumped into the marketplace,” said Thomas Fleury, executive vice president of Cityline Partners, a subsidiary DLJ Real Estate Capital Partners that is planning more than 10 million square feet of development for Tysons Corner.
Fleury helped develop the campus for WestGroup. He said the Freddie Mac buildings are made with marble and cased, textured, pre-cast concrete hauled in from Colorado. “Those buildings are timeless. They are as good today as the day we built them,” he said.
Though the offices are not particularly close to a Silver Line station, they would make an attractive landing spot for corporate users. “Any one of those buildings would be a world-class corporate headquarters building. Collectively they would make up an entire university, for crying out loud,” Fleury said.
Spokesmen for both agencies said that executives had not yet begun contemplating a departure from their existing headquarters. “We expect the transition from today’s housing finance system to the future system will be a multi-year process,” Fannie Mae spokesman Andrew Wilson said in an e-mail. “In the meantime, we remain focused on helping people buy, refinance or rent a home.”
For years, the government itself could be relied upon to fill vacant office space. But those deals have been harder to come by as federal spending slows. Multiple Tysons Corner properties, including one of Cityline’s, was recently passed over by the General Services Administration when it chose to move the National Science Foundation’s headquarters to southern Alexandria.
A writer for thetysonscorner.com, a blog about the area, called for the Freddie Mac campus to be re-zoned for mixed-use development, saying “instead of leaving the Freddie Mac property to deteriorate or hoping for a new corporate tenant, Fairfax County needs to plan their next steps and leverage future changes to the benefit of Tysons and the county.”
Fannie Mae has 7,000 employees, about 65 percent of which are located in the Washington area, the majority of those at its corporate headquarters at 3900 Wisconsin Ave. NW.
Matt Pacinelli, senior vice president of leasing at District-based developer Penzance Cos., said “there have been discussions about them contracting out of there or whether they need that space or are too full and may need to move elsewhere.”
“The campus doesn’t seem to reflect the intent of the organization at this point,” he said.
In the meantime Pacinelli said both Fannie and Freddie are making short-term real estate decisions, such as lease extensions, without knowing how long the organizations are likely to be around. “How do you manage a corporate goal that’s unclear with the immediate decisions that have to be made?” he said. “Fortunately, they are the government and they are in a market where many landlords would be happy to have them.”