Feds Look To Sell Vacant Office Building On 10-Acre Site In D.C. Suburbs
As the federal government comes under increasing pressure to bring its workers back to their desks, it is looking to shed an unwanted office property it owns in the D.C. suburbs.
The General Services Administration is holding an online auction for a 10.5-acre site in Alexandria that features an empty, 110K SF office building surrounded by parking lots and green space.
The bidding process began in late December, and the agency expects to close the auction in late February. The bidding began at $2M, and bids must be made in at least $100K increments, according to the auction page.
The property at 6801 Telegraph Road was previously occupied by the Department of Defense, which moved out in 2015. Over the last seven years, the GSA tried to bring another agency into the building, but those efforts were fruitless.
The government ultimately decided that the level of investment required to upgrade the property to today's office standards didn't make economic sense, so it decided to sell, said Tim Sheckler, who leads the GSA's property disposal division in the national capital region.
"We looked around the federal cupboard, and there wasn’t a good fit," Sheckler told Bisnow. "And then we also looked at the amount of investment that would have to be put back into the building to refresh it. There were higher capital priorities, and the decision was made to move it out of the inventory."
The property has appealed to buyers in part because of its potential to be redeveloped to other uses, Sheckler said.
The property's existing zoning would allow just one residential unit per acre, but it has the potential to be rezoned for higher density. It is in the Fairfax County section of Alexandria, so developers would need to go through the county's rezoning process to add density.
Sheckler said most prospective buyers have considered demolishing the building for a redevelopment, and they have eyed uses including housing, hotels and schools.
"We’ve seen a variety of interest," he said. "We’ve seen some people want to knock down the building and redevelop the site as some type of residential use, and we’ve seen other uses where people have come in and wanted to potentially reuse the existing building."
The property is also appealing to developers because of its location, Sheckler said.
The site is located near the nexus of two main roads, Telegraph Road and South Kings Highway, and less than 4 miles from I-95 and the Beltway. It also sits across the street from a golf course and less than 2 miles from Kingstowne Towne Center, a large retail complex anchored by Walmart, Giant, Aldi and Kohl's.
The auction process, which lasts several weeks, allows prospective buyers to see the other bids that have been made online and submit higher ones. The GSA is holding an "industry day bidders conference" on Feb. 8, plus several open houses in February as it prepares to close bidding near the end of the month.
Once it announces the close of the auction, buyers can continue to submit higher bids as long as they do so within 24 hours of the prior bid. The bidding would then continue until a full day elapses without any new bids, at which point the GSA will evaluate the highest bidder.
The federal government's office strategy has garnered increased attention from the commercial real estate industry over the last three years as many agencies have continued to allow employees to work remotely. Local leaders, from D.C. Mayor Muriel Bowser to The Washington Post's Editorial Board, have pressured the White House to mandate more regular work.
The GSA had already been employing a plan to reduce footprints prior to the pandemic, and it has sought to consolidate offices into owned buildings to reduce its lease expenses.
GSA Public Buildings Services Commissioner Nina Albert told Bisnow in September 2021 — shortly after she began in the role — that she intended to continue this strategy to reduce the government's leased footprint.
"Ideally, what we would do is renovate existing federally owned buildings and absorb a lot of that space need into existing buildings," Albert said in the 2021 interview.
But this type of consolidation doesn't always make sense for every building, Sheckler said. The Telegraph Road property is the only one the GSA has for sale today in the D.C. area, but it has seven properties being marketed for sale in other regions, according to the agency's website.
"There has been, in the last few years, a look at trying to do consolidation where it's feasible and makes sense," Sheckler said. "It’s not a rarity that a property goes up for sale, but it ebbs and flows."