FBI Reversal Marks Latest Loss For A County Long In Need Of A Big Win

It seemed like Prince George’s County had finally landed the massive economic development victory it had long been waiting for in the fall of 2023 when the federal government selected it as the site for a new $3.5B FBI headquarters.

That plan is now likely dead after President Donald Trump announced earlier this month that his administration intends to stop the headquarters move.

The reversal was a huge disappointment for a county that has historically garnered less public and private investment than its neighbors — and was hoping the headquarters would spark an economic renaissance. 

“It was what the Pentagon was to Northern Virginia,” said David Iannucci, who until Dec. 31 led the Prince George's County Economic Development Corp. 

“It was literally going to change the economy of Prince George's County going ahead for generations,” he said.

The loss of those public dollars — and the private ones expected to come with it — is the latest setback for the county’s efforts to boost investment. Last year it lost a full-building office tenant that had been one of its most celebrated tech companies before going bankrupt, and the county enacted a rent control law that real estate leaders say is discouraging investment.

And this year, like the rest of the D.C. area, Prince George’s County is reeling from the federal government’s mass layoffs and budget cuts, which affect federal and contracting jobs in the suburban jurisdiction. 

These challenges come at a moment of transition for the county's leadership. 

Prince George's is preparing to elect a new leader to replace County Executive Angela Alsobrooks, who was elected to the U.S. Senate in November. State’s Attorney Aisha Braveboy won the Democratic primary for county executive earlier this month, and she is considered the favorite to win the June general election in the heavily blue county. 

The county also lost Iannucci, who retired at the end of last year after leading the Prince George’s County Economic Development Corp. since 2018 and working for the county executive for seven years before that.

Acting County Executive Tara Jackson and the PGEDC didn't respond to Bisnow's requests for comment for this story. 

Prince George's is home to more than 30,000 federal jobs and more than 50,000 residents who work for the federal government. Federal wages account for more than 15% of the county’s gross income, according to a Moody’s Ratings report released this month.

Maryland faces the greatest risk from federal job cuts and policy changes of any state, the report says.

Investment interest in the county was already suffering from the effects of a rent stabilization act that went into effect in September, real estate executives said at a Bisnow event that month. The law limits rent increases to 6% or the consumer price index for all urban consumers plus 3%, whichever is lower.

“There’s a smaller slate of active investors here today than there was a year ago,” Chris Grant, a partner at Yoke Management Partners, a firm that specializes in naturally affordable housing, told Bisnow, estimating that the number of investment players in the county has been cut in half. 

“It’s significant,” he said. 

Now, on top of that, uncertainty about the federal government's impact on the region is creating even more hesitation for investors. 

The topic of the federal government has come up in every one of Grant’s calls with investors over the past few months, he said, usually at the very start of the conversation.

“With the Trump administration kind of underpinning this idea of regulatory uncertainty, you have this moment in time where, again, the regulatory risk in the county is bigger than it has ever been,” he said.

Since taking office, the Trump administration has fired at least 121,000 federal workers, according to CNN’s running tally. 

“We've seen a lot of anxiety about it,” Jolene Ivey, a Prince George's County council member who until last week served as the chair of the council, told Bisnow. 

She said neighbors who have been terminated have written letters, sent text messages or stopped by her house to speak with her and her husband, Rep. Glenn Ivey, a Democrat who represents Maryland’s 4th Congressional District, which includes most of Prince George’s County.

Along with the personal struggles she has witnessed, the depletion of wealth that comes with those job losses could put Prince George's at risk of a housing crisis.

“When you look at it on the county level, it's going to have an impact on our budget,” she said. “People who had these jobs are generally doing pretty well, and they have mortgages that can be significant.”

Now, without the FBI headquarters, some 7,500 federal jobs that the county was counting on may never arrive. That presents an additional loss of tax revenue and vitality for the county. 

“They would move to be close to their employer,” Iannucci said of FBI employees. “They would live in our neighborhoods. They would buy houses, they would shop in our stores. Their kids would have gone to our schools.”

The FBI would also have brought “significant” private investment along with it, Iannucci said. The “broad impact” would have included contractors and businesses that work with the bureau, plus service providers looking to benefit from the thousands of high-wage employees and residents. 

“It all would have been a completely amazing support for the Prince George's County economy, something that's been long overdue by the federal government,” he said. 

Also up in the air is a $1.4B Treasury printing plant that was slated to come to the county. The Army Corps of Engineers canceled its design and build solicitation in January after receiving one bid, citing “budgetary constraints and a reduction in the project's required scope.”

Iannucci told Bisnow everyone he has spoken to, including members of Congress, expect the solicitation to go back out, likely with some changes to some of the labor requirements.

The project is expected to bring 1,600 jobs to the county.

The uncertainty now about when and if those federal investments will ever take place comes as many private businesses that rely on government funding face an existential crisis.

Along with federal workers, Trump’s Department of Government Efficiency is slashing millions of dollars in federal contracts, largely tied to foreign aid, research and diversity initiatives. 

“I don’t think many anticipated the potential for such massive cuts across federal agencies and programs and grant funding that we are starting to see play out with USAID, NIH, Hopkins etc., which will majorly affect the state,” Maryland-based Hogan Cos. president Tim Hogan told Bisnow in emailed responses to questions. 

With those cuts, federal contractors that rely on those grants and funding programs and tend to locate around the D.C. region to be close to the federal government are in trouble.

Colliers Vice Chair Adam Schindler, who represents a wide range of tenants, including government contractors, said he had one such firm, which he declined to name, that was looking at sites in Greenbelt to relocate from D.C.

“In late January, the CEO was like, ‘Look, we need to put this on hold for the time being,’” he said. “So there is still this uncertainty. There are still a lot of executives who are in this wait-and-see mode.”

He said that firm wasn’t specifically an FBI contractor, but he does know of firms that contract with the agency that were considering following its headquarters to Greenbelt. 

“A lot of the contractors that were planning to colocate or service the FBI are now probably not going to make that move,” he said. 

Some contractors in Prince George’s County have notified the state about plans for mass layoffs. 

Greenbelt-based defense contractor Peraton issued a Worker Adjustment and Retraining Notification with the state, signaling it intends to lay off 123 employees on Monday. 

Lanham-based Science Systems and Applications Inc. issued a WARN notice for 148 employee layoffs effective April 8. 

It is unclear what will happen to the office spaces they occupy. Prince George’s County was suffering from high vacancy before any of the federal adjustments took effect. 

The county’s nearly 17M SF of office space was 18.7% vacant as of the end of the year, according to CBRE’s office market report. The county had 201,500 SF of negative net absorption last year. 

Prince George’s County lost a major office tenant last year when online education provider 2U filed for bankruptcy protection and vacated its headquarters building in Lanham. 

The company was one of the county's biggest economic development successes over the last decade. In 2016, 2U moved to Lanham, leasing an entire 325K SF building at 7900 Harkins Road, near the New Carrollton Metro station. The company had pledged to add more than 900 jobs by 2020. The county executive and economic development head were among the 800 people who attended its grand opening ceremony in April 2017. 

But 2U later faced financial challenges and filed for Chapter 11 bankruptcy, which it emerged from in September. It moved out of its headquarters building, and in October, it relocated to a smaller space in Crystal City.

“That was a very significant loss to Prince George's County,” Iannucci said.

2U’s former building is now vacant. CBRE Senior Vice President Niel Beggy, who leases the building, said he has been trying to land a tenant of at least two or three floors to kick off backfilling it. But he doesn’t see many tenants of that size looking for space, as companies reduced their space requirements during the pandemic and are now worried about the federal cuts.

“There’s just a lot of headwinds in today’s market,” Beggy said. 

Multiple real estate and county leaders said the good thing is that Prince George’s has risen from the ashes before. The county was hit particularly hard by the Global Financial Crisis and was slow to recover.

But when it did, the recovery was a powerful one, leading the state in job growth between 2011 and 2021.

“Prince George’s had a massive chip on its shoulder and used that as a source of motivation for great progress in the county in the aftermath of the GFC until about 2020,” Hogan said. “It needs that fire in the belly again.” 

“It’s like the perfect storm right now against us,” Ivey said. “But we're resilient, and ultimately, we continue to get better.”

Jon Banister contributed to this story.