Intelligence Exits Washington, Vacancies Rise: Mortgages
A guard clutching an assault rifle and another with a German Shepherd block the entrance to a parking garage on a quiet street in Arlington, Virginia, gateway to the Defense Intelligence Agency.
Heavy security at 3100 Clarendon Boulevard may not be necessary next year when the DIA, whose mandate is to protect the U.S. from surprise attacks, is scheduled to leave the 250,000 square-foot (23,000 square-meter) building.
Office vacancies in the Washington area have risen to the highest since 1991, according to data compiled by Bloomberg, as the government implements the 2005 Base Realignment and Closure Act and other cost-cutting efforts. Another $1.2 trillion of automatic spending cuts are projected over the next nine years as part of last year’s Budget Control Act, a deficit reduction plan agreed to by Congress and President Barack Obama, adding pressure to landlords including Vornado Realty Trust (VNO) who are scrambling to find new tenants for buildings housing contractors and some of the Washington area’s most secret agencies.
“Certain submarkets are going to suffer when these move outs occur, exposing a lot of space that all of a sudden is going to be on the market,” said Lad Duncan, a Charlotte, North Carolina-based analyst for Wells Fargo Securities LLC.