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School Is In Session For Downtown D.C.'s Vacant Offices

As the dark cloud of record-high office vacancy hovers over downtown D.C., a growing number of universities from across the country looking to establish a foothold in the nation's capital is starting to provide a glimmer of sunshine.

The University of Southern California paid $49.4M for a 60K SF Dupont location, the former HQ of the National Association of Broadcasters, to house a new USC Capital Campus.

“Even though people are really nervous [about downtown], this might be the greatest opportunity we’ve ever had to really shape the Washington we all would like to live in,” said Adam Glaser, a managing director at KPMG and an instructor for urban and regional planning at Georgetown University

D.C. is home to 40 university satellite campuses concentrated in areas surrounding the White House and Capitol Hill, according to data from JLL. The campuses account for nearly 1M SF in the D.C. region, and that footprint is growing. 

“Universities are taking advantage of the soft market fundamentals right now in the leverage they have as a tenant, especially in the downtown market, where vacancy is still very elevated at historic highs,” JLL mid-Atlantic Research Lead Michael Hartnett said. 

In March, the University of Southern California paid $49.4M for the Dupont Circle building that formerly served as the headquarters of the National Association of BroadcastersStream Realty Partners redeveloped the 60K SF office building at 1771 N St. NW and sold it to the university, which opened the USC Capital Campus last month.

Princeton University signed a lease in February to open a center for its School of Public and International Affairs, also in Dupont, at 1333 New Hampshire Ave. NW.

It will soon have another Northeast-based institution as company: Syracuse University intends to sign a lease in the next few days for 15K SF at the same building, on the first and ninth floors, and move into the space in early 2024, Syracuse Vice Chancellor of Strategic Initiatives and Innovation Michael Haynie said in an email.

Last month, Purdue University announced it will open Purdue@DC in McPherson Square in a coworking facility at 1301 K St. NW, which will house its semiconductor and microelectronics program, a tech diplomacy program and Purdue’s federal relations team. 

The White House-Capitol corridor, where most of D.C.'s satellite university campuses are located, according to JLL's analysis.

All of those new spaces combined don't add up to the space Johns Hopkins University is set to open this fall. It is constructing a 420K SF D.C. campus at the former Newseum building at 555 Pennsylvania Ave. NW after the Baltimore-based university purchased the building in June 2020 for $302.5M.

Glaser said he is aware of discussions about more universities coming to the downtown and Golden Triangle areas. He said nondisclosure agreements preclude him from saying which ones but said “the schools that are most actively looking tend to be in the Big 10 or the ACC.” 

“Over the next two or three years, I think you'll see more schools plant a flag in the D.C. region,” Hartnett said. 

Satellite campuses in the District are used in a variety of capacities, including alumni relations, lobbying grant coordination, and serving as classrooms and housing for students “studying abroad” in D.C., Hartnett said.

Nearly all of the 40 satellite locations use part of their space for government relations, and 16 include classrooms, event space and offices for faculty and staff, according to JLL’s analysis. 

Syracuse is one of the universities focused on student programming. It has had a graduate student presence in the District since the mid-1990s with the Maxwell School of Citizenship and Public Affairs, Maxwell School Dean David Van Slyke said, later offering other programs, like law and communications.

This academic year was the first time the school offered undergraduates the opportunity to study in D.C., through Newhouse. Syracuse is also in the midst of launching a new Institute for Democracy, Journalism and Citizenship based out of D.C., a joint effort between the Newhouse and Maxwell schools that will house event programming, research, experiential learning, teaching and instruction. 

Syracuse Director of Washington Programs Beverly Kirk said a major draw for expanding student programming is the more than 15,000 Syracuse alumni in the District, as well as the opportunity for students to see the inner workings of the nation’s capital. 

“If you're going to be a journalist, even if you never want to work in Washington, you have to understand how Washington works,” she said. "And this program provides that kind of opportunity."

As the offerings expand, so will the upstate New York university's footprint. In moving to a new Dupont location, Syracuse hopes to establish a “one-university” center in D.C. for "students, faculty, staff, alumni and other partners," Haynie wrote in an email.

Syracuse sold its Greenberg House at 2301 Calvert St. NW in 2020 and subsequently began searching for a larger piece of real estate “given record-low prices coming out of the pandemic,” Haynie said. Since then, the university has been using short-term leases at a variety of locations around the city for its programs. 

“This is now an approach to take an enterprisewide element to showing that the university is firmly ensconced in the greater Washington, D.C., area,” Van Slyke said.  

Universities like Syracuse expanding their footprints downtown could play a crucial role in the recovery of D.C.’s central business district, experts said. Office vacancy in the CBD was 20.7% in the first quarter, when 153K SF of offices emptied out, according to JLL. 

Universities are increasingly seen as a possibility for filling some of those vacant office spaces. Glaser imagines downtown office buildings transforming into university hubs with a combination of office, classroom and student residential space, with possibilities to colocate data centers and research facilities. He said downtown D.C. office buildings would prove easy conversions for university needs. 

“What I'm seeing in higher education facilities is people are moving away from classrooms toward buildings that are like office buildings, either for experiential building or seminar work,” he said. “So as a result, in a weird way, office buildings are much better-positioned for academic uses than they were 20 years ago. You saw that with USC. They're basically able to take that building as a turnkey and go right into it.” 

It is a solution Hartnett said he is “bullish” on in the long term.

“Universities are a very sticky tenant base from a physical occupancy perspective,” he said. “They are really presenting a great opportunity to revitalize pockets of the downtown market that have seen reduced foot traffic during the pandemic and now into 2023.” 

Local business officials also said the influx of university facilities can help solve the area's vacancy and foot traffic issues — and do it faster than the District's push to encourage developers to convert old office buildings into apartments.

“Apartments and condos are not going to be the sole answer to this,” said Leona Agouridis, president and CEO of the Golden Triangle Business Improvement District. "It's not going to be the only thing that balances out this kind of microeconomy."

In addition to USC and now Syracuse, inside the Golden Triangle BID's borders are a Pepperdine campus at 2011 Pennsylvania Ave., Texas A&M’s Bush School of Government and Public Service at 1620 L St. and an Arizona State University campus at 1800 I St.

The Newseum building on Pennsylvania Avenue, which Johns Hopkins University bought and redeveloped into a 420K SF campus.

Along with Johns Hopkins and Purdue, the DowntownDC BID is home to the University of California Washington Center at 1608 Rhode Island Ave. NW. 

Mayor Muriel Bowser highlighted her administration’s efforts to fuel the downtown satellite campus pipeline in her Comeback Plan, released in January. The plan outlines key milestones D.C. can take in leveraging downtown university presences, including exploring “growth aspirations and needs of universities” and marketing “Downtown DC as a higher education cluster for the region.” 

Glaser said he is working with the city to rewrite its Comprehensive Plan and said the most recent draft has language about “the importance of academic partners.” 

“The District is starting to realize how important [satellite campuses] are,” he said.

A point of tension when it comes to satellite campuses moving into downtown could arise in a potential disparity between schools with and without resources. Glaser said that only schools with the most financial resources will be able to locate in D.C.’s competitive market. 

“This trend is really healthy, exciting, dynamic, but I want to see it becoming much more horizontal,” he said. 

But he said the unique opportunity is one the city should be looking at very closely as it looks to restructure downtown. 

“The bottom line is there's nothing like what's happening in Washington,” he said. “We have this opportunity to rethink downtown in a much healthier way.”