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After change of heart, Fannie Mae eyes 15th Street for headquarters

Fannie Mae is planning to move its headquarters to downtown D.C. (Andrew Harrer/Bloomberg)

Fannie Mae officials had all but decided to consolidate their headquarters to 555 12th St. NW, downtown office space set to be vacated by the law firm Arnold & Porter.

Then they had a change of heart.

According to two sources familiar with the negotiations, Fannie Mae is now in advanced negotiations with developer Carr Properties to consolidate its headquarters into a new office building planned by Carr at the corner of 15th and L Streets Northwest. The new offices are planned as part of a new mixed-use development Carr plans to build in place of the current headquarters of The Washington Post, which is moving to new K Street offices in early 2016.

Prompted by expiring leases at two of its Washington buildings, Fannie Mae announced plans over the summer to sell its headquarters buildings on Wisconsin Avenue NW and consolidate employees to a single location in D.C.

Two sources said that as recently as three weeks ago, Fannie Mae executives appeared ready to move to the 12th Street building, which Arnold & Porter is departing in favor of a new building at 601 Massachusetts Avenue in October. The sources spoke on the anonymity because the negotiations are subject to non-disclosure agreements.

But both sources said Carr, led by president and chief executive Oliver Carr III, then re-entered the picture and has now all but locked up the deal. Carr and representatives of Met Life, which owns 555 12th St. with Norwegian investment bank Norges Bank, either declined comment or did not return requests for comment.

The housing finance organization’s interest in moving downtown despite the looming possibility that it could be reorganized has drawn criticism from some lawmakers on Capitol Hill. The firm remains under federal control after being placed in conservatorship by the Federal Housing Finance Agency during the last recession.

A Fannie Mae spokesman said the organization has not yet signed a lease but that it was approaching the end of its search for a new home.

“As we continue this process, we remain focused on making responsible real estate decisions that will use resources wisely, ensure the safety and soundness of Fannie Mae’s operations, and give us the flexibility to adapt to changes in our future workplace needs,” the statement said.

If Carr sweetened its deal for Fannie Mae, it would be the latest sign of how thin the office market has become in Washington.

Landlords with new or nearly completed projects in Rosslyn, NoMa and Tysons have not filled their buildings. Some of their owners have not announced any leases. Vacancy rates in D.C., Northern Virginia and Suburban Maryland are among the highest they have been since the recession.

Carr Properties is not immune to the slow leasing environment. Late last year it completed its own new office building, at 4500 East-West Hwy. in Bethesda, and most of the building remains available for lease.

Follow Jonathan O’Connell on Twitter: @oconnellpostbiz