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From The Ground Up

U.S. Agencies, Contractors Lead Space Race

By Dana Hedgpeth
Washington Post Staff Writer
Monday, September 13, 2004; Page E03

At four of the region's largest real estate brokerages, more than half the tenants looking for large chunks of space are government agencies or their contractors, and brokers said the increased competition for space among companies in the booming defense and security industries could mean higher rents.

Among the 10 largest tenants looking for space over 100,000 square feet:

Tenants seeking smaller offices have many options, but finding buildings with more than 100,000 square feet available is difficult, particularly in the District. (Dennis Brack -- The Washington Post)

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• Government agencies like the Defense Department's Missile Defense Agency, which is seeking 1 million square feet in Northern Virginia to consolidate 2,500 workers now spread over four offices in the region. The Coast Guard is also looking for half a million square feet and the Department of Defense for 471,000 square feet in Northern Virginia; and the Justice Department is searching for roughly half a million square feet in the District.

• Contractor SRA International Inc. , which makes software for such government clients as the Food and Drug Administration, the Department of Defense and the Internal Revenue Service, is looking for 300,000 square feet in the Rosslyn, Ballston and Crystal City areas.

• BAE Systems North America Inc., a designer and maker of military aircraft, submarines and radar, needs 200,000 square feet in Fairfax.

• General Dynamics Corp., which makes warships and planes, is looking for up to 200,000 square feet to consolidate some of its offices in the region.

The information comes from brokerages Cushman & Wakefield Inc., Spaulding & Slye Colliers, Staubach Co. and Trammell Crow Co.

After the Sept. 11, 2001, terrorist attacks, the defense and security industries boomed as government spending in these areas rose.

The surprise in the list of the 10 largest tenants seeking space, said Brian McVay, senior managing director of Cushman & Wakefield, is the predominance of the General Services Administration, the real estate agency for the federal government.

"I would have expected more law firms, but most of them that were looking for big blocks of space have already signed up," McVay said. Typically, there are more law firms and associations on the list.

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