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It Pays to Partner Up

Washington DC Office

Just like any good song, rolling out a public/private partnership boils down to relationships. Four Points principal Steve Cassell, here with MetLife's Anthony Balestrieri at our Federal Property/PPP Summit yesterday at the Willard, says having relationships with political stakeholders is especially important, as he saw in developing Progression Place mixed-use in Shaw. The city awarded development rights of the site to his firm and Ellis Development but could have pulled the plug after anchor office tenant RadioOne had to drop out. Relationships built with the city council saved the effort, and the partners were given the benefit of the doubt.

The United Negro College Fund (here's COO Early Reese) eventually took RadioOne's spot as anchor tenant at Progression Place, after it had already agreed to move into other space in the building. But Early says the organization's move to DC from Fairfax County wouldn't have been possible without cooperation from the City, which gave UNCF a relocation allowance and tax relief to make the transition easier.

Older office buildings downtown might be ripe for GSA move-ins, says JBG's Rod Lawrence (with JLL's Lucy Kitchin). The departure of law firms and other large companies to newer, more efficient space elsewhere creates a lot of holes in the market, Rod says. Lucy says managing expectations for federal leasing is important though, since the government simply isn't growing as fast as it used to; there was flat growth last year compared to the recent historical average of about 5%. (Those heady days when the National Park Service was hiring any moose it could find.)

Federal build-to-suit opportunities for developers aren't as plentiful as they used to be, says LCOR's Bill Hard. For example: 4,700 employees at the US Patent & Trademark Office (its Alexandria HQ was built by LCOR) work from home, which equates to about 1M SF of office space that isn't out there. So the onus is on developers to find new ways to attract government agencies. (Showing a little skin only helps to lure NIH, and they just want to look for rashes.)