The high price of office space is creating an underground economy in downtown Washington.
While the people who run big law firms still favor rooms with views, they are asking developers to dig deeper and provide cut-rate basement space for some of their so-called "back-office" employees.
The trend could add a new twist to the stratification of the downtown work force.
"It seems like the answer to everybody's prayer, but it's not that easy to deal with it," said Steven Teitelbaum of the law firm Jones, Day Reavis & Pogue. "There are a lot of touchy-feely issues that have nothing to do with economics. The ... problem is, who do you put below grade? That requires a decision that a lot of law firms, for political reasons, aren't willing to make."
Despite the glut of office space and the deep rent discounts developers are offering, major law firms that last negotiated leases several years ago are experiencing sticker shock as they shop for new and bigger offices. The same firms generally have added a disproportionately large number of support personnel in recent years.
The law firms' desire to lower overhead could drive many of those workers underground.
"Prices have gotten so high in general, costs have gotten so out of hand ... nobody can afford them anymore unless they start moving ... into the basement," Teitelbaum explained.
One developer predicted that even attorneys in large firms, whose offices traditionally exude prestige and reflect their place in the corporate pecking order, may be assigned underground offices.
"Because of the economics of the space, you're going to see more and more firms putting working attorneys down there," said Richard Garr of Circle Development, which is planning to include 110,000 square feet of underground offices in a 750,000-square-foot building at 2121 Pennsylvania Ave. NW. "This is a new trend that really is being driven by economics, the pure cost of having a lot of space downtown that is very expensive," Garr said.
Developers call it "below-grade" space. Although the phrase has other connotations, it means below ground.
Space in the windowless subterranean office warrens will rent for about half the price of higher-level offices in the same buildings, real estate executives said. The difference could translate into savings of more than $1 million a year for a big tenant.
"We're aggressively looking at this space because we think it has big implications for the economics," said Abraham Isenberg, executive financial director of Howrey & Simon, one of several large Washington firms seeking space to expand.
Isenberg said several of his firm's departments -- such as computing, accounting, word processing, copying and personnel -- may be located in underground offices.
While secretaries would not be separated from their bosses, the paralegals who assist lawyers could be moved underground, Isenberg said.
In addition, secure "war rooms" could be created underground for use by teams of lawyers working on major cases. The war rooms would enable lawyers to spread out documents and leave them behind a locked door at the end of the day.
Other firms have considered moving legal libraries underground and creating mock courtrooms where lawyers can rehearse for trials.
Some firms pay top dollar rents for office space they use only for storage.
Few existing downtown buildings feature below-grade space, but some of the major projects in development are incorporating it.
One downtown developer, the Kaempfer Co., recently took the dramatic step of redesigning a building to include underground office space after it already had broken ground.
Kaempfer made no provision for underground offices when it designed the Warner Building at the corner of 13th and E streets NW, a redevelopment of the historic Warner Theatre coupled with a new office building. Kaempfer began digging the foundation last summer.
But Howrey & Simon and other potential tenants wanted underground space. Last fall, Kaempfer's Dutch investment partner and British construction lender agreed that it was worth delaying development and digging a deeper foundation to make the building more competitive. The changes eventually will add "many millions of dollars" to the cost of the building, said J. Byrne Murphy, Kaempfer project manager.
Kaempfer is keeping its options open and, if the tenant prefers, will convert the underground office space to parking, Murphy said.
Another Kaempfer building on the drawing board employs a similar concept. The custom-designed headquarters of Arnold & Porter, a Washington law firm, will include three classes of space: offices with windows, known as A space, for lawyers and other professionals; interior or core space, known as B space, for clerical staff; and underground space, known as C space, for assorted other support staff and activities. The design calls for an atrium to light the underground space.