From the Ground Up
Justice Department Plans Consolidation
Monday, September 3, 2007
The federal government has largely stopped searching for new office space in Washington, with the Bush administration in the twilight of its tenure and its efforts focused largely on the war in Iraq.
Yet one big federal deal this year has several commercial real estate companies hungry: the Justice Department's goal to bring its criminal division under a single roof.
"You don't have a lot of new growth in government," said David A. Happ, vice president of leasing and management for Louis Dreyfus Real Estate, whose bid not make it past the first round of evaluations. "It's a very big deal for lots of folks in this town."
At least eight major players survived the preliminary round of review, according to those familiar with the bids. This week property owners will begin giving formal presentations to the General Services Administration, which negotiates government leases. The GSA does not make bids public.
The department plans to move about 1,200 employees from buildings at 1301 and 1400 New York Ave. NW and 1331 F St. NW. It is the biggest lease expected from the federal government in the District this year. The GSA wants a single building that will accommodate 521,000 square feet of office space under a 15-year lease not to exceed $24.5 million a year.
This search, like last year's deal to lease 450 Fifth St. NW for the Justice Department's antitrust and civil divisions, is part of a decade-long effort to upgrade and consolidate the department's workforce.
While most developers declined to comment or did not return phone calls, people close to the bid said three sites near and around NoMa were still in play, as were three sites in Northwest and two sites in Southwest Washington. Those who commented did so on condition of anonymity because they did not want to derail a deal.
In the emerging North of Massachusetts neighborhood, or NoMa, Tishman Speyer of New York has broken ground at 1100 First St. NE; Trammell Crow has plans to build on 90 K St. NE, and Walton Street Capital of Chicago has a development site called Constitution Square at 1275 First St. NE.
"If they are going to stay in Washington, there really are not a lot of options," said Del. Eleanor Holmes Norton (D-D.C.), who has long advocated for government migration to NoMa. "Anything with grass has already been built on in the District. Every blade of glass. And this is still by far the cheapest."
The sites in Southwest are the Patriots Plaza II and III on the 300 block of E Street, owned by the Multi-Employer Property Trust; and the Nassif Building at 400 Seventh St. SW, which is owned by David Nassif Associates and is being renovated.
"We would be delighted to have the Department of Justice in our building, and they would probably make a wonderful tenant," said Timothy Jaroch, managing general partner of David Nassif Associates. "We are well underway with the renovation of our building."
Other sites under consideration are 425 I St. NW, owned by Paramount Group of New York; a site at the corner of H Street and New Jersey Avenue NW owned by Bennett and Owens and being developed by Boston Properties; and Mount Vernon Place, a mixed-use development bounded by Massachusetts Avenue, K Street and Third and Fifth streets NW, owned by Quadrangle Development.
Alejandro Lazo covers commercial real estate. His e-mail address email@example.com.