As MCI WorldCom Inc. prepares to move into a vast new campus in Loudoun County, the global telecommunications company is quietly decreasing its presence in the District, where MCI once reigned as the capital's leading high-tech power and its largest public corporation.
MCI WorldCom, based in Clinton, Miss., is trying to find a subtenant to take over a large block of office space that it rented two years ago in a building at 1717 Pennsylvania Ave. NW.
Executives in the real estate industry say the company is also exploring the possible sale of MCI's longtime headquarters building at 1801 Pennsylvania Ave. NW, although it has not begun marketing the building. If the building were sold, MCI WorldCom could rent it back for a time or shift its domestic-services headquarters to another D.C. building, the sources note.
An MCI WorldCom spokeswoman said the company would not comment on its real estate plans.
An MCI WorldCom executive who asked not to be named said about 1801 Pennsylvania Ave.: "We have received proposals from different companies, and that is all we have done. People will call and say they want to make an offer, and we always look at them, but it is not on the market."
The vacant 105,000-square-foot space at 1717 Pennsylvania Ave. amounts to about 20 percent of the company's total office space in the city, although it is unclear how much of it space was ever occupied. The space, which has recently shown up in commercial real estate rental listings, is big enough for about 400 workers.
MCI was founded in the District in 1968 and remained headquartered there even as most of its operations spread across the globe.
Mississippi-based WorldCom acquired MCI for $43 billion last year and has since begun to concentrate its local operations in Loudoun County. The company is constructing a 1.3 million-square-foot corporate campus where 4,500 employees are expected to be working by the end of the year, in the center of a rapidly expanding cluster of Internet businesses. The Loudoun site eventually could accommodate twice that many employees.
Just a year ago, D.C. officials were hoping to persuade MCI to expand in the capital.
In May 1998, the District made a confidential offer to construct a $100 million building to MCI's specifications on Massachusetts Avenue near Union Station and lease it to MCI for 20 years for about $25 per square foot. The proposal--the largest incentives offer ever made by the District to a D.C. employer--was far below the $40-plus-per-square-foot price for typical new top-grade office space in the District and comparable to prices in Loudoun County.
Initially, MCI was interested. Wayne Rehberger, an MCI vice president, replied to the city in July, in part: "We are excited about this proposal and future opportunities for both MCI WorldCom and Washington, D.C. We look forward to continued discussion."
At a meeting with Washington Post editors and reporters in June 1998, WorldCom Chairman Bernard Ebbers seemed to embrace a larger role in the District.
"We are going to be continuing to fully occupy the MCI building downtown," he said. "We have been working with some organizations trying to come up with a method of adding roughly 2,000 jobs in the city here because we were falsely accused of taking people out of the city and going other places.
"But we have a responsibility to the cities where we're headquartered to address the minority-hiring situation. And that's one of our attempts to do that."
MCI Chairman Bert C. Roberts Jr. added in the same meeting, "I think the message here is that the domestic division will still be headquartered in the MCI building and we will continue to increase our presence."
But after the merger's completion in September 1998, officials from the WorldCom side of the company took over responsibility for the issue and the conversations died, according to Richard Monteilh, a former D.C. official who led the negotiations and who now is executive director of the D.C. Chamber of Commerce.
"It was important to the District for image reasons, for all kinds of reasons. . . . It was probably the biggest disappointment I had in years of economic development [work] because it seemed so winnable."
The complex that MCI WorldCom is building on part of a 530-acre tract near the Dulles Greenway is the largest example of the high-tech corporate campuses that are expanding the far reaches of the Northern Virginia suburbs.
The campus parks of America Online Inc., Orbital Sciences Corp. and smaller companies are adding to the Washington region's technology base--and to the traffic congestion on major corridors in Northern Virginia.
High-tech companies are attracted to campuses for technical, financial and lifestyle reasons, said Craig Lussi, a real estate broker at Julien J. Studley Inc. who has represented a number of such companies nationally.
"It's easier to control, and the cost is less," Lussi said, particularly for companies such as MCI WorldCom that own their campuses. "If I build my own building, I'm not paying the $4 to $6 [per square foot] in pure profit that landlords are making in these buildings."