Base Realignment and Closure (BRAC) Update DC − Baltimore Region November 2010 Contents Base Realignment and Closure (BRAC) Update When originally announced in 2005, the recommendations of the Base Realignment and Closure (BRAC) Commission were expected to result in: 2005 BRAC 1 • The relocation of between 35,000 and 56,000 jobs from Washington, D.C., Arlington County and Alexandria, VA, and Bethesda, MD to Fort Belvoir, VA, Fort Meade and Arlington County Aberdeen Proving Ground, MD, and the Marine Corps Base in Quantico, VA. 2 • Signifi cant changes in commuting patterns for an estimated 19,000 to 30,000 Fairfax County, Fort Belvoir employees from Washington, DC, Arlington, VA, Alexandria, VA, Bethesda, MD to Fort 3 Belvoir and Quantico, VA. Alexandria, Mark Center • The relocation of a number of defense contractors due to federal agency moves. For 4 every one federal job, history has shown 1.1 to 3 contractors will follow. Springfi eld/Newington • An impact on up to 15 million square feet of public and private sector offi ce space. 4 Since the announcement of those recommendations in 2005, speculation has varied widely Anne Arundel County, Fort Meade on the impacts of BRAC-related moves on the DC-Baltimore employment market and 5-6 commercial real estate markets. This update explores the current and potential impacts of BRAC on Northern Virginia (suburban Washington, DC) and Baltimore, including the Harford County, Aberdeen submarkets most likely to be affected, local employment trends, and the impact on offi ce Proving Ground space. 7 2005 BRAC Public & Private Sector Spending 8 What is BRAC? According to the US Department of Defense, Base Realignment and Closure (BRAC) is “a Congressionally authorized process that the Department of Defense (DoD) uses Government Contractors to reorganize its military base structure to meet increased national security requirements”. 9 BRAC 2005 was the fi fth round of this process, and focused on reshaping the DoD by having multiple organizations share facilities. By statutory agreement, the realignment is Impacts & Outlook to be completed by September 15, 2011. The City of Alexandria and Arlington and Fairfax 9 Counties in Northern Virginia will be affected by the bulk of requirements for Fort Belvoir; Anne Arundel and Harford Counties in Maryland will experience most of the BRAC changes Appendix at Fort Meade and Aberdeen Proving Ground. 10-11 Contacts 12 cassidyturley.com | 1 Base Realignment and Closure (BRAC) Update DC − Baltimore Region November 2010 Arlington County, Virginia Arlington County could be the most signifi cantly affected jurisdiction due to BRAC-related moves by the Department of Defense and its private sector contractors. This is especially true for Crystal City and Pentagon City. The BRAC relocations are expected to have a great impact on the local employment base and offi ce markets. Over 5.4 million square feet of offi ce leases in 47 buildings are projected to be affected in Arlington as part of BRAC-related moves. This accounts for approximately 17 percent of total offi ce inventory in Arlington County, and approximately one-third of the inventory in the Crystal City submarket alone. In fact, 3.7 million square feet of federal leases in Crystal City will be affected by BRAC. M AC 23 E ST 395 A £29 ST ¤ RD S § R ¨¦ TH E U R BLVD R O 9TH D ST C 50 T ¤£ K C ST R Constitution E 395 (! E Gardens ¨¦§ K MA 124 (!(!(!(! INE AVE UV £29 (! 110 ¤(!(!(!(!(! UV LO RC O M LN Washington D.C. 66 D Arlington County: Release of Offi ce ¨¦§ V L B N O (! Space in BRAC D N (! B E OU R N A ¤£50 L UV110 D C A R Y D 1,200,000 (! ArlingtonArlington NationalNational CemeteryCemetery R H ST 10T R UV27 1,000,000 D 395 § X ¨¦ FA I R 800,000 UV237 FA (! (! NAVY DR (! 400 600,000 MY (! UV (! (!(!(! AR (!(! H $ billions 27 A Square Feet UV (! (! 400,000 D Y (! R ! E (! Ronald Reagan S (! S ( 120 ST (! G UV S T (! (! Washington National N D 200,000 VD I N L 2 !(! R ((! B 244 P UV (! S 0 !((! N ( I L 2010 2011 2012 2013 2014 2015 After R A 2015 C (! Arlington 395 Square Feet ¨¦§ ¤£1 ¤£50 120 Source: Arlington Economic Development UV M D UV244 O Ballston Rosslyn Clarendon/Courthouse Crystal City/Pentagon City Arlington County Employment Although some BRAC-related moves are on track to meet the September 2011 deadline, 70,000 some relocations have been delayed. Not all BRAC-related offi ce space will experience a 60,000 mass exodus by the deadline. In Arlington County alone, 900,000 square feet of offi ce leases 50,000 have been extended through 2012; additional leases totaling 2.3 million square feet have 40,000 been extended through 2013 or later. $ billions 30,000 20,000 Even with a large amount of government-related offi ce space vacated in the near term, 10,000 Arlington County projects total employment to grow in both Crystal City and Pentagon City by 0 almost 50 percent over the next 15 years. 2005 2010 2015 2020 2025 Crystal City Pentagon City Please refer to Appendix A for a detailed list of Arlington buildings affected by General Services Source: Arlington County Department of Community Planning, Housing and Development Administration (GSA) leases related to BRAC moves. Although these leases are related to BRAC, there is the possibility that GSA may backfi ll some of these spaces with other federal tenants. cassidyturley.com | 2 Base Realignment and Closure (BRAC) Update DC − Baltimore Region November 2010 Fairfax County, Virginia Fort Belvoir Fort Belvoir, located in southeastern Fairfax County, will be the new location for the headquarters of several U.S. Army and Department of Defense (DoD) agencies. As such, Fairfax County and its surrounding areas are likely to be greatly impacted by the BRAC plan. The area appeals to DoD agencies and federal contractors due to its proximity to Washington, DC and the Pentagon. As one of the largest employers in Fairfax County, Fort Belvoir currently employs over 29,000 civilian and military personnel. According to the Fairfax County Economic Development Authority, employment on and off base at Fort Belvoir is expected to grow by almost 43% and will eventually accommodate 19,300 civilian and military personnel from BRAC-related moves. Agencies and facilities moving to Fort Belvoir include: Fort Belvoir Employment Growth • National Geospatial Intelligence Agency (NGA) 35,000 • A new 120-bed hospital with expanded specialty care facilities 30,000 (formerly medical care functions were provided at Walter Reed Army Medical Center in Washington, DC) 25,000 • Missile Defense Agency 20,000 • Inventory Control Point functions from military bases in 15,000 Pennsylvania and Ohio 10,000 • Emergency Services Center (FBNA) 5,000 Currently, there are 20 separate building projects underway at Fort Belvoir, both renovation and new construction. The projects total 0 Main Post Ft Belvoir North Mark Center Rivanna Station almost 6.2 million square feet of offi ce space and 7 million square feet of parking structures with total construction costs estimated at Current BRAC Non BRAC approximately $4 billion. Source: Fairfax County Economic Development Authority Fort Belvoir Agency Moves Agency Relocation Site Employment Square Feet Cost Delivery National Geospatial-Intelligence Agency Engineering Proving 8,500 2.4 M SF $1.77 Billion - new construction Spring 2011 (NGA) Ground Washington Headquarters Services (WHS) Mark Center - Alexandria 6,400 1.8 M SF $1.08 Billion - new construction Fall 2011 Fort Belvoir Community Hospital Main Post - Ft. Belvoir 3,200 1.275 M SF $807 Million - New Construction Spring 2011 Department of the Army Main Post - Ft. Belvoir 2,800 544,000 SF adaptive reuse and infi ll − Program Executive Offi ce - Enterprise Main Post - Ft. Belvoir 400 185,000 SF adaptive reuse and infi ll − Information Systems (PEO-EIS) Joint-Use Intelligence Analysis Facility Rivanna Station 1,000 170,000 SF $61 Million - new construction − (JUIAF) Missile Defense Agency (MDA) Main Post - Ft. Belvoir 292 99,000 SF $38.5 Million - New Construction Nov-10 Emergency Services Center (FBNA) − 50 14,700 SF $7.2 Million - new construction Early 2011 Dental Clinic − 77 14,900 SF $12.6 Million - new construction Fall 2011 North Regional Medical Command − 232 − $17.5 Million - new construction Fall 2011 (NRMC) Total: 22,951 6,502,600 $3.7 Billion Source: Fairfax County Economic Development Authority cassidyturley.com | 3 Base Realignment and Closure (BRAC) Update DC − Baltimore Region November 2010 Alexandria, Virginia Mark Center When the BRAC recommendations were fi rst announced, an estimated 7,200 jobs and 1.4 million square feet of space were to be transferred out of Arlington County. Because of the great number of building sites transferring to Fort Belvoir and the lack of suffi cient infrastructure, the Department of the Army and the Commonwealth of Virginia agreed to limit the number of units moving to the Fort Belvoir Engineering Proving Ground (EPG). Consequently, the Army searched for a site that could be developed as an “annex” to Fort Belvoir. To address this requirement, Action 133 created Mark Center in Alexandria, in close proximity to the Pentagon. The Army purchased Mark Center land from Duke Realty in September of 2008. With 6,400 jobs and 1.4 million square feet of offi ce space, Mark Center will be one of the largest BRAC- related projects. Mark Center will accommodate personnel from multiple agencies and units that include but are not limited to: • Washington Headquarters Service (WHS) • Defense Human Resources Activity (DHRA) • Offi ce of the Secretary of Defense (OSD) • Pentagon Force Protection Agency (PFPA) • Defense Technology Security Administration (DTSA) • DoD Inspector General (DoDIG) • DoD Education Activity (DoDEA) The offi cial groundbreaking on the Mark Center site occurred in March 2009.