MCI Communications Inc. signed a contract yesterday to buy nine acres of land and two office buildings at Pentagon City in Arlington for $68.5 million in what is thought to be the largest land deal in the Washington area in terms of dollars or space.
The rapidly growing company, which offers long-distance telephone service, plans to consolidate a number of its current administrative operations at the one, recently completed, 12-story building there, and construction is scheduled to begin on a second office building in July. The company plans to put up one or two more buildings on the nine-acre site just off Interstate 395. Its office space at Pentagon City then will exceed one million square feet.
MCI's newly gained parcel is part of a large, mixed-use plan being developed by Rose Associates of New York. When completed--perhaps a decade from now--the development is to include a shopping mall with three or four major department stores, 2,000 hotel rooms and close to 6,000 high-rise apartment units. Plans for the mall and the hotel may be announced later this year, developer Daniel Rose said yesterday.
Until recently, Pentagon City was little more than a desolate subway stop tucked between the Pentagon and Crystal City. The first 250,000-square-foot office building was completed last winter and has stood empty while MCI negotiated its deal with Rose Associates.
The Arlington County Board last week cleared the way for yesterday's agreement when it voted to rezone the Pentagon City site so all of MCI's office buildings could be in one block. The one million square feet of space were to have been spread over three blocks.
MCI will keep its headquarters at its D.C. site on 19th Street between L and M, but operations in four other places in the District will be taken to Pentagon City, said Charles Skibo, MCI senior vice president for planning and administration. Data-processing centers in Rosslyn and Rockville will stay where they are, he added.
Employes probably will start moving into the first building around November, Skibo said. The second building is scheduled to be ready in the summer of 1984, he said.
Jay Franklin, senior vice president of Smithy-Braedon, the broker for MCI in the transaction, said that the Pentagon City site was one of only three places in the area that could have met MCI's criteria for consolidating its offices and planning for future growth. The other two were the Tycon Courthouse project at Tysons Corner and Skyline Place at Bailey's Crossroads. Pentagon City was preferable, however, because of the subway stop, and proximity to the District and National Airport, Franklin said.
When MCI first moved into its 19th Street offices a couple of years ago, the company thought the 200,000 square feet of space there would be adequate for its needs indefinitely, and it even considered subleasing some floors, Franklin said.
But the company has boomed, doubling and redoubling its revenues and earnings in the past few years. At the end of March, MCI reported annual revenues of $506 million, spokesman Gary Tobin said.