"That enables us to start," says Brian Coulter, partner with JBG.
The agency, about five blocks away at 500 C St. SW, has signed a 10-year lease to fill 310,000 sf of a 430,000-sf building in Potomac Center. In March 2003, it expects to move about 1,000 workers into the new 12-story building, which will become its headquarters.
The developers expect to renovate and expand the existing Blue Cross/Blue Shield building at Maryland Avenue and 12th Street SW into a structure of 800,000 to 900,000 sf, although they could go as large as one million sf. Covering the entire block bounded by those two streets and ramps to and from the Southwest Freeway and Interstate 395, it would be one of the largest privately owned properties in the city. The General Services Administration signed the lease for FEMA, which will cost $31 per sf.
"In Downtown, rents can be up in the $50s. In the Southwest, we're looking at the mid-$30s. So it's a great price," said Anthony Costa, GSA assistant regional administrator.
Negotiated and signed in about five months, it was the second Federal lease completed rapidly in a fast-moving market that doesn't let tenants move slowly. Earlier this year, GSA signed a deal to place offices of the Department of Education in a property near Union Station in about four months. Spaulding & Slye represented GSA on both deals.
The southwest neighborhood has attracted new interest lately, with the move of the Federal Communications Commission and plans for a Mandarin Hotel. More than a year ago, JER Partners and JBG paid about $56 million for most of the block, which includes the eight-story Blue Cross/Blue Shield building.
The developers will provide $12 million in tenant improvements. The center will include a new Interagency Emergency Operations Center.
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