It’s been a while since I heard anyone express much optimism in government contracting .
Most are still bruised from last year’s government shutdown, and the budget deal struck earlier this year has been slow to bring relief. Every now and then, someone raises the possibility of another stalemate on the horizon, and utters the one word more dreaded than “humidity” in a Washington summer.
But perhaps the outlook is not so bleak. I heard notes of positivity in a conference call with analysts by top executives at Corporate Office Properties Trust, a Columbia-based office developer that caters to contractors and federal agencies.
Expansion in the Baltimore-Washington corridor in and around Fort Meade, where the U.S. Cyber Command is based, appears to be continuing apace. Chief executive Roger A. Waesche Jr. told analysts recently the company believes it reached an inflection point in the second quarter, and business is beginning to stir again.
“We are on track to capture as much as 700,000 square feet of leasing for newly developed and redeveloped space this year, which would exceed our initial expectations,” Waesche told analysts.
To hear Waesche tell it, businesses are anticipating that contract funds will begin flowing again, and have begun scouting office locations they may need once the money arrives. For instance, Corporate Office Properties has had inquiries near the Navy Yard in D.C. and other naval facilities
“I did a ratio on the vacant space we have available relative to the prospects, and we have got 1.6 square feet of prospects for every square foot we have available in those Navy-oriented markets,” he said.
To be sure, the opportunities are uneven. The company has had less success at properties it manages in Northern Virginia, where demand for space is weak. Corporate Office Properties has been reducing its holdings there, a process Waesche calls “finite and fixable.” All told, the Northern Virginia properties represent about 20 percent of the company’s portfolio, and any sluggishness there can be offset by new leases elsewhere, particularly in the Baltimore-Washington corridor, where demand chases limited supply.
“As a result, we are now filling up the leasing bucket more quickly than space leaks out,” he said.
Heck, the company might even consider constructing new buildings on spec, before a tenant is signed, added Wayne H. Lingafelter, president of development and construction services.
That kind of talk at least beats the alternative.