Prince George’s lobbies for federal leases
Perhaps it should not have been surprising to people in Prince George’s County on March 10 when the General Services Administration announced that it had decided to keep more than 3,000 workers for the Department of Health and Human Services in Montgomery County.
Prince George’s County, after all, is home to only a small slice of the region’s federal offices and has few existing buildings into which a major tenant could move.
But this time was different. This time it hurt. And maybe that says more about the prospects for transit-oriented development in the county than the loss of the HHS lease.
County leaders have long complained about the lack of federal jobs located in their communities, an argument documented by a 1999 report from the Brookings Institution called “A Region Divided: The State of Growth in Greater Washington, D.C.,” that showed exactly how different things were when one traveled from Fairfax County to Prince George’s County.
But in making the pitch to land HHS, Prince George’s seemed to have finally checked all the boxes the GSA looks at when it considers relocating thousands of its employees. Three Prince George’s County developers had purchased sites practically on top of Metro stations, county officials had lined up in support of their plans and members of Congress had secured relevant committee assignments and let GSA officials know in no uncertain terms — as D.C. Del. Eleanor Holmes Norton (D), now in her 11th term, has long done on behalf of the District — that they wanted the federal government to play an economic development role in their communities.
“There’s no way I can sit by and see the next GSA site not come to Prince George’s County,” says Rushern Baker, the newly elected Prince George’s County executive.
Baker will tell anyone who will listen that he wants to help the developers who have begun investing in land around the county’s 15 Metro stations turn those areas into the type of transit-oriented, walkable communities that all the region’s other jurisdictions have built in recent years. He has proposed a $50 million economic development fund that he says, if approved, will give him greater leeway to sweeten a deal for a GSA tenant that can anchor new development.
Which made losing all the more difficult. Three development teams, including two from Prince George’s, filed protests with the Government Accountability Office, alleging defects in the procurement process. Rep. Donna F. Edwards (D-Md.) said, “It seemed like there was some monkeying going on with the process.”
Baker said he thought Prince George’s made a strong case in pursuing the agency.
“We had three incredible sites,” he said. “The teams that presented for all three sites did a great job. And I think now we should be first in line to get leased space.”
Missing the Metro station employers
With a few exceptions, Prince George’s County does not have major employment centers atop its Metro stations the way much of the rest of the region does.
Every workday morning, dozens of Metrorail trains depart downtown Washington and pull into the county’s stations where — compared with morning rush trains headed elsewhere—very few people disembark.
Meanwhile, workers who live in Prince George’s County clog the Capital Beltway as they head to jobs in the District and Northern Virginia. Many are behind the wheel for more than 40 minutes in each direction, commutes that rank among the longest in the nation.
But unlike in the past, when many larger regional developers didn’t bother with the county, major firms in recent years have struck deals to buy land outright or partner with local landholders near the county’s Metro stations, including New Carrollton, Naylor Road, Largo, Branch Avenue, Prince George’s Plaza and elsewhere. With Metro not yet in Tysons Corner, there are few large available plots adjacent to Metro in the region that are not in Prince George’s.
“The one thing that P.G. has going for it is they can still do big deals,” said Darian LeBlanc of the brokerage firm Cassidy Turley.
As the industry returns from the recession, however, there is only one sure-fire way to ignite a new mixed-use development in an emerging market such as Prince George’s County, and that is to land a federal office tenant, real estate experts say. And that means leaning on the government’s leasing Goliath, the GSA, which leases only 2.6 million square feet of office space in the county, 5 percent of what it leases in the region.
“We have to continue to put pressure on GSA to use [transit-oriented development] sites,” said Michael J. Smith at a March forum organized by the Coalition for Smarter Growth. Smith, a vice president at LCOR, a Pennsylvania developer with offices in Bethesda, is working to attract a federal tenant to a site the company co-owns at the New Carrollton station. He said the company submitted for the HHS lease and is now in the running for the next big federal lease, more than 1 million square feet for the Department of Homeland Security.
Upon entering Congress in 2009, Edwards landed a spot on the subcommittee that oversees the GSA (Norton has long held a seat) and began hammering away at the GSA and the Office of Management and Budget for capping the rents it is willing to pay to lease space in Prince George’s and Montgomery counties: $34 per square foot in fiscal year 2011, compared to $38 in Northern Virginia and $49 in the District. Though based on market conditions, the caps can constrain new construction.
“I just want a clean process and a fair process, so that it’s a level playing field,” Edwards said. “Because there’s been such an extreme lack of development in Prince George’s County in particular that there are multiple opportunities.”
At a recent development forum, Robert A. Peck, head of the GSA’s Public Buildings Service since 2009, told Edwards and others in the crowd that he had looked into the rent cap disparity and wanted to change it.
“I think that there is the opportunity to make some adjustments here or overhaul that system and I’m looking forward to doing it,” he said.
Whether or not the caps are adjusted, developers said they appreciate the push by county officials.
“I haven’t worked with the county for a number of years, but it’s been very refreshing,” said Rod Lawrence, of the Chevy Chase-based JBG Cos., one of the region’s largest developers. JBG is part of a joint venture seeking the DHS lease near the Naylor Road Metro station. “All the people that we’ve dealt with have been very accommodating in trying to bring a use to these sites.”
Workers who can’t reach nearby stores
It will take more than simply landing a GSA lease for the county to transform one of its Metro-accessible communities into a mixed-use urban hub. A handful of transit-oriented federal agencies already own 4.4 million square feet in the county, but their arrival has not led to the type of economic spin-off that one might expect.
Take the U.S. Census Bureau, located at the Suitland Metro station, on the Green Line. Though it employs more than 4,000 workers there, it is a fortress of security, with high fences and hundreds of yards separating it from the road, where there are intermittent sidewalks leading to auto parts stores, a nail salon, a pawnshop, a Popeye’s restaurant and a carpet wholesaler.
In New Carrollton, at the terminus of the Orange Line, the Internal Revenue Service employs more than 5,500 people, but the building is connected to the Metro via an overhead walkway that crosses over four lanes of traffic, a parking lot and a bus stop.
“Your feet don’t even have to touch the ground,” said Cheryl Cort, policy director for the Coalition for Smarter Growth, an advocacy group. “Clearly that’s not the way to leverage thousands of office workers who could be going to meet a friend, go out for lunch, going to take their clothes to the dry cleaners.”
The GSA’s Peck has widely acknowledged that the federal facilities need not have a small town’s worth of retail indoors, and ought instead to encourage storefront retail and building designs that are more engaging at a sidewalk level. Plans for the GSA’s own headquarters in the District, for instance, recently received approval to add a new entrance and four retail bays.
Whether it is a GSA-anchored project or not, planners and smart-growth advocates have been working to ready the county to maximize its next opportunity and are encouraged by Baker’s focus on transit-oriented development.
Albert G. Dobbins III, deputy director at the county’s office of planning, has been publishing plans for development on land around Metro stations since 1997, with little to show for it. He praised Baker but did not discount the role of the economy in determining whether any mixed-use development can take off. “From a market perspective, we think there is a lot of opportunity right now but we still have a number of challenges,” he said.
The Coalition for Smarter Growth has argued that development incentives ought to be used to spur transit-oriented development in order to ease commutes, reduce auto pollution, preserve land and make communities more safe for walking. At a recent tour of Camp Springs, Cort pointed to an advertisement outside a hotel saying, “Walk to Metro.”
The Branch Avenue Metro Station, however, is more than two miles away, on the far side of the Beltway, and a number of pedestrians have been hit along the road leading there.
Waiting for a success story
Developers and brokers believe that the Homeland Security lease is easily the county’s best chance at getting a major federal tenant to jump-start a new mixed-use project.
The headquarters of the agency is being built nearby on the Green Line in Southeast Washington, and although the state plans to relocate its housing agency to a Prince George’s Metro station, it could be years before the county has such a good shot at a major federal tenant. More than 10 developers are believed to have made bids.
“Looking beyond DHS, I’m really not seeing much in the pipeline,” said Smith, of LCOR.
To lose DHS or to fall short in leveraging it into a lively neighborhood would further cement the county’s reputation for a failure to address the livability of its communities and the long commutes of its residents.
“The first one out of the box I think has to be successful,” said Aakash Thakkar at the smart-growth forum of the county’s transit-oriented development prospects. Thakkar is a vice president at EYA, the developer behind the Arts District Hyattsville, a residential-retail project at the West Hyattsville Metro station that he said is limited because many of the region’s home buyers still don’t know Prince George’s County well.
“On the balance the project is successful, but it’s not without its challenges,” he said.
Dobbins, from the country’s planning office, doesn’t want to see the newest set of plans go to waste.
“Prince George’s County needs a success story,” he said. “We need to prove it to ourselves and to the rest of the world that we can do transit-oriented development.”