The Navy's leases for about one-fifth of Crystal City are up for renewal, feeding the dreams of developers throughout Northern Virginia who want to lure the Navy to new office parks, and troubling Arlington officials who fear that the county could lose thousands of jobs and millions in tax revenue.

The Navy employs about 16,000 people in Crystal City; defense contractors who want or need to be close to their project officers employ another 6,700, most of whom would follow the Navy to a new location.

If the Navy left, "the impact would be serious and difficult for the community," said John G. Milliken, vice chairman of the Arlington County board. A move "would be bad for the Navy and bad for Arlington. We don't want them to leave," he said.

The Navy's presence in Crystal City accounted two years ago for $13.8 million in annual county tax revenue, about 5 percent of Arlington's $300 million-plus annual budget.

The General Services Administration, the federal government's real estate agent, has solicited expressions of interest in the Navy from other Northern Virginia landlords and developers. "We were very pleased with the responses," said GSA spokesman Dale Bruce, but he would not say how many responses were received.

It is known that the competitors include the current Crystal City landlords and the developers of two proposed projects in Alexandria and another in Prince William County.

For Arlington, this is another skirmish in a long-running war.

In 1981, the Navy began plans to move from Crystal City to the Navy Yard in Washington.

In subsequent years, those plans were repeatedly scuttled by Virginia members of Congress who saw to it that no money was appropriated to pay for the move.

This time the political guns have been stilled, because only sites in Northern Virginia are being considered.

"It does change somewhat the nature of the debate," said Albert C. Eisenberg, chairman of the Arlington County board.

Sen. John W. Warner (R-Va.) is a case in point. In the past, Warner has used his post on the Senate Armed Services Committee to protect Arlington's interests. Now that the battle has shifted from a fight between Arlington and the District of Columbia to an intra-Virginia competition, Warner has taken a hands-off stance.

"He sees his role as making sure that each competing interest has the relevant information it needs from the Navy to make a decision on whether or not to bid," said Peter A. Loomis, Warner's press secretary.

Rep. Frank R. Wolf (R-Va.), whose district includes Arlington, has not taken a position other than to say that the federal government should be "sensitive" to the impact that such a move would have on the county.

In the past, Wolf has been vocal in opposing a Navy move from Crystal City to the District. Wolf said his stance has moderated this time because other government tenants might take the vacated Crystal City space should the Navy leave. "I don't think I can say {the Navy} absolutely can't look" for other office space, he said.

The GSA tentatively plans to award the new leases in October 1988, a year before current agreements expire. The Navy occupies 2.1 million square feet in Crystal City and is looking for 2.5 million square feet. In comparison, the Pentagon covers about 3.7 million square feet.

The Crystal City space leased by the Navy houses the Naval Sea Systems Command, the Naval Air Systems Command, the Naval Supply Systems Command and the Space and Naval Warfare Systems Command, according to the GSA.

The value of the current leases is about $14.7 million a year -- about $7 a square foot, according to the GSA. How much that rent would rise is the subject of negotiation.

The going price for office space in Northern Virginia ranges from $18 a square foot a year in low-rise office parks in the Chantilly area to $25 a square foot annually in a Tysons Corner high-rise, said Howard A. Jensen, senior sales consultant for Coldwell Banker Commercial Real Estate Services.

However, it is not that simple. A developer might find it cost-effective to give the government a break on the rent to lure the contractors. "The contractors, they have to be near the Navy. You jack up the rents for them," said an employe of a military consulting firm. The employe asked not to be identified.

"The Navy is the best example of a multiplier effect within a local economy," said John R. Gessaman, director of the Office of Economic Development in Prince William County. "You're not just getting the Navy. You're getting all the other companies who are located where they are because of the Navy."

In addition to the Navy's current landlords at Crystal City, those who confirmed that they are interested in pursuing the Navy include:

Developer Laszlo Tauber, who has proposed a 2.5 million-square-foot project called the Bush Hill Development on 21 acres in Alexandria's Eisenhower Valley. The project "would be built just for the Navy," said Barbara P. Beach, Tauber's lawyer. The project was turned down recently by the Alexandria City Council, but Beach said an application will be resubmitted should the Navy bid be successful.

Hoffman Entities, another Alexandria developer with property on Eisenhower Avenue, also is competing. Holly Hoffman said her firm has expressed its interest to the GSA, but she declined to comment further.

The Anden Group, a Southern California-based firm, is attempting to win the Navy leases for its Potomac Southbridge development, a 2,200-acre development in southern Prince William County. Plans for the project call for 20 million square feet of office and retail space. "It would be an opening trump card for us," said James P. Joyce, president of the firm's Washington division.

The Navy is so attractive as a potential tenant that the developer is planning to bid even though Potomac Southbridge misses by 14 miles the Navy's specifications for a site within a mile of the Capital Beltway.

Joyce argued that transportation will be less of a problem than it seems at first. A proposed commuter rail line from Fredericksburg, Va., to Washington would run through the project, and his development is close to the eastern leg of a proposed Washington bypass.

Crystal City, where the Navy is today, is a collection of offices, shops and residences close to National Airport. Its buildings are owned by a number of private developers, and the Navy sprawls over 16 structures. About one-third of the Navy space is owned by the Charles E. Smith Cos., which developed Crystal City. The other Navy offices are in buildings owned by four other landlords, according to the GSA.

Scott Sterling, a spokesman for the Smith Cos., said his firm will take the lead in a bid by the Crystal City landlords to retain the Navy. "We like the Navy. We think they've been a good tenant for us," he said. "We think we've been good landlords. We hope we have a reservoir of good will going into the negotiations."

Sterling acknowledged that the Navy is in a good bargaining position. "Some of these leases are 20 years old," he said. "The market has changed dramatically. They've seen the kinds of things that prime tenants get. When you're talking about that much space, it's a good leverage position."

Arlington officials said their role is limited to providing technical assistance to Arlington developers, including the Navy's current landlords.

"Beyond that, there is little Arlington County can do," said Thomas C. Parker, Arlington's director of economic development. "We don't control the land, the space or the negotiations. It's an open process. The GSA is being aboveboard."

A 1985 report commissioned by Arlington said 19 percent of the county's work force and more than one quarter of its office space can be attributed to the Navy leases. Arlington could weather such a loss, but it would be difficult, Parker said.

"The good news is we're starting from a position of strength," he said. Since 1981, Arlington has had one of the lowest office vacancy rates in the region, about 3 percent, he said. The vacancy rate rose to 6 percent this year, but it is still relatively low. Vacancy rates in Crystal City this past quarter have been under 4 percent, and in the past few years have been nearly zero.

"I see Arlington maintaining that healthy position," Parker said. But the loss of the Navy "would certainly set back the construction pace in Crystal City as well as in the rest of the county."

"I'm concerned," Parker said. "But I'm absolutely confident there is not another better location" for the Navy, he said, noting that Crystal City is close to Metro, the Pentagon and the Beltway, all factors the GSA has said will be vital in selecting the new leases.

Despite the efforts of hopeful developers, local officials said they have done virtually no lobbying to bring the Navy to their respective jurisdictions. One reason is that the GSA wants an option to buy the buildings that house the Navy, part of a federal government policy aimed at cutting costs.

"I'd love to have the Navy move to Alexandria under one condition -- that they lease," said Alexandria Mayor James P. Moran Jr. Federally owned buildings are not subject to local taxes or zoning, he said.

Another reason is traffic. The Navy "brings a lot to the private sector, but it brings an awful lot of traffic," said a Fairfax County official who declined to be identified. "These are not the days for any local politician to be championing that."