Alexandria’s Victory Center Lands Major Government Tenant
- Aug 18, 2015
The U.S. General Services Administration announced on Wednesday that it has signed a new lease agreement for the Transportation Security Administration’s national headquarters. The deal not only provides the TSA with more efficient space but also saves taxpayers more than $95 million over the 15-year lease term.
The TSA’s new home will be Alexandria’s Victory Center Building, a vacant, 625,000-square-foot facility located at 5001 Eisenhower Ave. and owned by Eisenhower Real Estate Holdings LLC, an investment fund managed by Prudential Real Estate Investors. The agency is currently headquartered at 601 and 701 S. 12th St. in Arlington. It will move its 3,800 employees into the new location by the spring of 2018, after Eisenhower Real Estate Holdings completes all construction and tenant build-out at Victory Center. The project calls for the construction of an adjacent 140,000-square-foot, LEED Gold-certified technology and meeting center and an above-ground parking facility with 7,000 square feet of retail space along Eisenhower Avenue.
According to the GSA, the TSA will occupy Victory Center at a rental rate of $36 per square foot and a utilization rate of $153 per square foot. The rental rate is more than 25 percent below projected market rents, while the utilization rate is 20 percent lower than the agency’s $200-per-square-foot current utilization rate. Additionally, the agreement provides the government with more than $50 million for tenant fit-out costs and other transition-related expenses.
“This is yet another great GSA-negotiated deal for government and the American people,” Darren Blue, PBS Commissioner for the GSA’s National Capital Region, said in a statement. “The new lease agreement allows TSA to consolidate four locations into one at a rental rate and utilization rate that will ensure the agency is more efficient and effective in executing its mission.”
Mark Stadsklev was the GSA lease contracting officer for the lease agreement, with JLL as the broker representing the government.
Getting the TSA, with its 3,800 employees and $7.36 billion annual budget, to move to Victory Center represents an important win for Alexandria. The city said it now intends to create the Eisenhower West Victory Center Redevelopment District, which means that any real estate improvements made for the TSA at Victory Center will be eligible for as much as $1.5 million in annual property tax abatements, though the building itself will remain fully taxable. Although this could amount to a $23 million abatement over the 15 years, Alexandria still expects to get $25 million in net new tax revenue. The creation of the new tax district is subject to public hearing and approval by the city council.
“GSA’s decision to locate the TSA headquarters at Victory Center is a huge economic boost for Alexandria as a whole, and for the West End in particular,” Mayor William Euille added.
According to the city, the relocation project will create 640 temporary construction jobs, with the 3,800 new TSA employees raising Alexandria’s overall workforce by 4 percent. In each of the 15 years, the headquarters is expected to generate close to $16 million for the local economy, while its occupancy will bring Alexandria’s office vacancy rate from 16.5 percent to 13.5 percent, making it one of the lowest in the Washington metro area.
Photo credit: www.thevictorycenter.com