Skip Ribbon Commands
Skip to main content

News release

Washington, DC.

BRAC Building Relocations Present Northern Virginia with Unique Opportunity

Jones Lang LaSalle predicts that BRAC will open up market space, allowing for office updates and redevelopment


WASHINGTON DC, June 2, 2011 — The relocation and manuevering of Department of Defense facilities due to Base Reallignment and Closure act are expected to result in substantial changes throughout the Northern Virginia office market, raising challenges and opportunities for both owners and occupiers.  

An extended deadline for relocations is expected to reduce the effects of BRAC, and Jones Lang LaSalle predicts that the relocations will provide the region with a unique opportunity to strengthen and solidify the Arlington County market,  returning office space to the market with low vacancy rates and allowing for the repositioning or redevelopment of functionally obsolete buildings.

BRAC is the process by which the U.S. government closes excess military installations and seeks efficiencies or additional security protection by realigning its building inventory.  The 2005 BRAC initiative outlined changes that would heavily impact the Arlington County market, particularly in Crystal City and the Rosslyn-Ballston Corridor.
 
In Arlington County, 41 buildings will be impacted by BRAC, a number that includes 102 leases totaling 4.6 million square feet.  However, this large turnover will be eased due to an extension by the federal government, moving the deadline for BRAC relocation from 2011 to 2014. 

“We are advising our clients that they do not need to be worried about a mass exodus of DoD tenants from leased office space in Arlington County,” said Lucy Kitchin, Vice President of Government Investor Services at Jones Lang LaSalle.  “As we’ve seen, the deadline has already been extended from 2011 to 2014, and we are continuning to monitor events as they unfold within the Department of Defense, on the Hill and within the administration.”

Historically, 10 to 20 percent of BRAC recommendations are never implemented, and due to the high volume of relocations planned, many changes may be delayed or only partially executed.  Moreover, the full extent of BRAC’s impact remains unclear, as congressional rulings could reduce or even eliminate some planned relocations.

Given Arlington County’s historical ability to fill large blocks of space, it is likely that, excluding BRAC vacancies, net absorption will outperform historical averages over the next four to five years.  Moreover, Arlington County’s proximity to the Pentagon, Washington D.C., a superior transportation system and a highly educated workforce has historically produced strong levels of demand, making the County well-positioned to absorb high levels of vacant space within a short period of time.

“BRAC is important to the Northern Virginia office market and, in particular, Arlington County, because there are more than four million square feet of space scheduled to be vacated,” said Jones Lang LaSalle Senior Research Analyst Brent Mathis.  “This gives owners an opportunity in a tight market to reposition their assets for the long term, either through redevelopment, renovation or, in some cases, even a residential conversion.”

By 2015, Jones Lang LaSalle predicts 867,698 square feet will be vacated by the government in the Rosslyn-Ballston corridor, in comparison to 3,970,190 and 3,102,492 square feet vacated by BRAC in Arlington County and Crystal City, respectively.
 
 
 
 
 
At 55.6 percent, most of the space vacated by BRAC is Class B office space. Class C space makes up 35.6 percent of relocation vacancy while Class A stands at 8.8 percent.

“We believe that the impact on Class A office space will be minimal,” said Mathis.  “Less than ten percent of the BRAC space is Class A inventory and, if anything, we see this as an opportunity for Arlington County – as a whole – to reinvent itself somewhat, to update older inventory, and to cement its place as the leading submarket in the Metro D.C. area.”
 
About Jones Lang LaSalle

Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2010 global revenue of more than $2.9 billion, Jones Lang LaSalle serves clients in 60 countries from more than 1,000 locations worldwide, including 185 corporate offices.  The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.8 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with more than $43 billion of assets under management. For further information, please visit our website, www.joneslanglasalle.com.