Exxon studying whether to consolidate offices, could close Fairfax operation

FAIRFAX,VA. SEPT. 8.: ExxonMobil headquarters located on a campus at 3225 Gallows Rd, Fairfax,VA on Sept. 8, 2010. ( Photo by Jeffrey MacMillan )
FAIRFAX,VA. SEPT. 8.: ExxonMobil headquarters located on a campus at 3225 Gallows Rd, Fairfax,VA on Sept. 8, 2010. ( Photo by Jeffrey MacMillan ) (Jeffrey Macmillan - Jeffrey Macmillan For Washington Post)
By Jonathan O'Connell
Monday, September 13, 2010

Exxon Mobil is reviewing its real estate portfolio in the United States, intensifying speculation that the company will close or downsize its operations in Fairfax, where it employs about 2,600 people.

The wooded 118-acre campus in Fairfax, located at the intersection of the Beltway and Route 50, was owned by Mobil when the company was acquired by Exxon in 1999 and is now headquarters to Exxon Mobil's management of oil refinery, lubricant production, government relations and other operations. The company is conducting an analysis of its real estate holdings, which includes the fate of the Fairfax complex, said company spokesman Alan Jeffers.

"Some of the options we're looking at -- it ranges from maintaining our current footprint, or the other end of the scale, consolidating some of the offices," Jeffers said.

The analysis is scheduled to wrap up next year. "The bottom line is that no decisions will be made until the study is completed," he added.

Earnings from the units headquartered in Fairfax -- those geared toward production and distribution -- dropped 24 percent from the first half of last year. In March, an Exxon competitor, Chevron, announced plans to cut its workforce for similar "downstream" units by 2,000 positions to reduce costs and improve efficiencies. Jeffers, however, said Exxon sees no industry trends that would necessarily force changes to the campus.

Fadel Gheit, a senior energy analyst with Oppenheimer in New York who has followed Exxon for 30 years, said he would not be surprised if the energy giant closed the campus to streamline operations. The offices on the site, hidden from the roadway by forest, have been renovated since being built in 1980 and enjoy a convenient entrance to the Beltway, but Gheit said it would make more sense for its employees to operate in the Houston area where the company already employs about 15,000 people. In January, the Houston Chronicle reported that Exxon, which is based in Irving, Tex., and earned $7.56 billion in the second quarter, may be looking to expand its operations north of the Texas city.

"They kept it for 10 years, made commitments, brand new offices and all these things," Gheit said of the Fairfax location, "but to tell you the truth, there is no compelling reason to keep them there."

Fairfax County has made a name for itself in recent years by attracting major corporations, but losing all or a portion of jobs at Exxon -- the world's third-largest company -- could tarnish that image. Through a spokesman, Gerald L. Gordon, president and chief executive of the Fairfax County Economic Development Authority, declined to comment, citing a policy against discussing potential corporate moves.

The losses would stretch simply beyond jobs, as Exxon employees donated $2.7 million to local charities last year, benefiting more than 500 groups, and have given more than $16 million since 2002.

Jim Dinegar, executive director of the Greater Washington Board of Trade, called Exxon "a very, very good corporate citizen in greater Washington." He said the company would risk losing talented executives with a move to Texas. "If you close down such an enormous place, it's not like thousands of employees suddenly decide to move with you," he said.

Still, the local real estate community has been buzzing for months about the possible availability of the campus and already an interested buyer may be emerging. The Defense Intelligence Agency is currently seeking offices of at least 523,000 square feet in Northern Virginia where it can consolidate its Washington area operations and, according to a source familiar with the search who was not authorized to discuss it, has taken an interest in the Exxon campus, which has 1.2 million square feet of offices. The DIA requires security setbacks that the Exxon campus would easily meet and a location within three miles of a Metro station; Exxon is 1.5 miles from the Dunn Lorring-Merrifield station.

Consolidating on the Exxon campus might be problematic because the DIA plans to begin its move by February of 2012 and the General Services Administration, which is conducting the search, has already received offers for other sites. A DIA spokesman would not comment on possible locations. The GSA is expected to make a decision this fall.

If not DIA, other potential buyers would likely emerge. Scott Martinson, acquisitions director for real estate developer Hines, said "speculation has really begun to pick up in the last year" about the site's availability and that its location and ability to absorb more development make it valuable. "The existing building would be difficult to lease on a multi-tenant basis, since it's so large. It would probably have to be incorporated in a larger plan development," he said.

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