WASHINGTON, DC-On Friday, GSA announced that National Science Foundation would be moving from its current Ballston, VA, location to Alexandria, VA, in 2017.
The agency plans to occupy 660,848 square feet at the Hoffman Town Center complex at a rental rate that is more than 30% below the market rate, the agency reports. The NSF's new digs will offer more efficient space than its current locations and use less energy and water than typical office buildings, it also said.
The deal also provides the government with $35 million, which can be applied to further rent savings, reduce costs of relocation, and reduce overall operational costs. JLL' s Government Investor Services Group repped the building owner.
The NSF's decision reflects several trends percolating in the DC area office market. The obvious one is the not-so-new-anymore frugality of the federal government. Sequestration and a desire, in general, by the government to rightsize its property footprint has resulted in landlords negotiating better deals to keep their federal tenants in place. Usually it works -- the expense and complexity of a move is usually a factor in the decision to stay put -- but occasional a better deal can be had and as the government has shown with NSF, it is perfectly capable of picking up and moving.
Another trend on display with this deal is the desire for more efficient space, which usually means newer space.
NSF currently occupies Stafford Place, a two-building, 555,707-square foot complex acquired by Ralph Dweck in 2006 for $197 million. Last year Dweck reportedly tried to sell the buildings but pulled back because it was unclear whether NSF would renew, according to the Washington Business Journal. According to Transwestern's website, NSF occupies 97% of Stafford Place 1 and 52% of Stafford Place II. For the moment, both buildings are fully leased.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
