Developers protest search for DHS office space

By Jonathan O'Connell
Monday, May 24, 2010

Developers are protesting a federal search for more than 1 million square feet of new office space for the U.S. Department of Homeland Security, saying the specifications favor one property holder in particular.

Two official protests have been filed, one by an entity of the JBG Cos. with property on Naylor Road in Temple Hills, and another from the owners of the Victory Center, an existing office complex at 5001 Eisenhower Ave. in Alexandria.

GSA is looking for space in parts of D.C., Prince George's County and Northern Virginia, but its search area does not include Victory Center. "What we're arguing is that the delineated area as required in the GSA solicitation is narrowly drawn," said Michael A. Hordell, an attorney at Pepper Hamilton for Eisenhower Real Estate Holdings, of which Prudential Real Estate Investors is an owner. "It limits the sites."

The GSA is also requiring that respondents either provide an existing building or complete the permitting process by the end of 2010 for a new building -- a pricey and risky undertaking for a developer with no sure tenant.

P. Brian Connolly, senior vice president at Akridge, said his firm had hoped to pitch a proposed 2.7 million-square-foot development it plans at 100 V St. SW, but the GSA ruled the property ineligible because it is slightly more than the required half-mile from a Metro entrance.

Connolly said that when he read the solicitation, he thought the specifications seemed to match those for Constitution Center, the renovated former headquarters for the Transportation Department in Southwest D.C.

"If it didn't say it, it hinted around all four corners of that," he said.

That building, owned by David Nassif Associates, has 1.4 million square feet to rent, is highly secure, energy efficient and only three Metro stops from the future DHS headquarters, at the site of the former St. Elizabeths Hospital.

"I think the conventional wisdom among those who watched was that by default it was going to go to an existing building and that there was only one existing building that could accommodate them," said developer Jeff Epperson, who is partnering with developer Foulger-Pratt on a bid to bring DHS to Howard Road Southeast in D.C.

Tim Jaroch, David Nassif Associates's managing general partner, said the parameters aren't meant to favor his property. "They are not requiring any such building to match the features of Constitution Center or even come close to the features of Constitution Center," he said.

GSA spokesman Michael McGill said the agency is being very flexible in considering multiple jurisdictions and allowing respondents to propose multiple sites, but that DHS needs to be moved in by mid-2014.

"We have a fairly tight schedule. We're looking for a lot of space, and we're looking for this space to be ready for occupancy in time for expiring leases," McGill said.

"If we miss these deadlines," he added. "we, and the American taxpayers, face a very costly short-term lease extension."

The controversy has revived concern on Capitol Hill, particularly from Rep. Donna F. Edwards (D-Md.), that Prince George's County is home to an unfairly small share of federal facilities. Although the county has almost 31 million square feet of federally owned space -- which is slightly less than Montgomery County has but more than any jurisdiction in Northern Virginia -- Edwards said "the overwhelming majority is warehouse space" and that she is looking for Class A office buildings that can jump-start Metro-accessible development.

"Prince George's County is not asking for any special consideration, but it is asking for consideration," she said.

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