SRA International moving to smaller, less expensive space

Government services firm SRA International plans to relocate its headquarters from Fair Lakes to Chantilly in 2015 and will reduce its space requirements as the company continues seeking ways to cut costs.

SRA says it has agreed to lease 165,000 square feet in the Westfields office park on Conference Center Drive, about 35 percent less space than it currently has at 4300 Fair Lakes Ct. in Fairfax.

Kevin Graves, the company’s vice president and director of corporate real estate, said the company isn’t planning to reduce its headquarters staff. Rather, like law firms, government agencies and other major office users, SRA will be moving to an open floor plan that would save the company money and promote flexible work schedules and collaboration, Graves said.

“Frankly, our employee feedback that we get is they like to have a collaborative, environmentally friendly place to work. And work/life balance is rooted in their flexibility and mobility,” he said.

After its founding in 1978, SRA grew into one of the region’s top homegrown government services firms, providing information technology and other services to government units in defense, intelligence, health and other areas. In 2011, it was acquired for $1.88 billion by Providence Equity Partners, which took the company private. Under new president and chief executive William Ballhaus, the firm has been undergoing a restructuring, sharpening its focus on areas such as cloud computing and cybersecurity.

SRA’s agreement to lease space at 15036 Conference Center Dr., off of Route 28, was unusual in that the company’s current lease does not expire until the end of 2015. Graves said he considered dozens of locations in the area, but in the end the company will only move about seven miles. Graves said the new location will prevent major changes to employees’ commutes. “It’s all about attracting and retaining talent so they can be as productive and efficient as they can,” he said.

But Graves and the company’s real estate brokers said there was another major factor: The weak office market in the Dulles Corridor offered favorable conditions for tenants looking to lease space, even if a move isn’t planned for years.

The office vacancy rate in the southern end of the Route 28 corridor in the first quarter was 15.4 percent, among the highest in the region, according to Jones Lang LaSalle. Completely empty buildings are still available and no new buildings have been built there in more than a year. Analysts expect it to be another year or two before conditions improve.

“We know that the real estate market is cyclical, and there are times when it’s good for tenants and times when it’s good for landlords. We think this is a tenant time. And if you wait a year or 18 months, it might be a landlord time,” Graves said. “I personally don’t think it’s going to be getting better.”

Carr Properties owns the building, having purchased it in 2002. Oliver Carr III, chief executive for Carr Properties, was traveling abroad last week and unavailable for comment.

“The message to landlords is you’re in a dogfight to keep your tenants,” said Jeff Groh, managing director at Jones Lang LaSalle. Groh and colleague Robert Shue, who both represent office users in the area, said clients like SRA are reaping savings of between 30 and 45 percent in annual operating costs by signing now and moving into more efficient space.

Groh argued that with the federal government and its contractors cutting back, conditions are not likely to improve for building owners any time soon. “There’s nothing on the horizon that’s going to make it thrive instantly,” Groh said.

Jonathan O'Connell has covered land use and development in the Washington area for more than five years.
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