I recently wrote that a healthy downtown office market, plus a federal rule that has pushed offices outside downtown, have combined to fill in all of the “parking craters” in downtown DC. That doesn’t mean they’re totally gone, though. They’ve just moved to other places in the city.
Over the years, DC noticed the success it found in broadening the federal government’s definition of the Central Employment Area, the space eligible for federal government offices. The District successfully lobbied the General Services Administration to widen the CEA further to encompass not just downtown, but also NoMa, much of the Anacostia riverfront, and the former St. Elizabeth’s campus. Because the latter areas have much cheaper land than downtown DC, and lots of land to build huge new office buildings, federal offices are now drifting away from the downtown core.
A developer with a small site downtown usually won’t bother to wait for a big federal lease, as the government wants bigger spaces at cheaper rents. It’s easier to just rent to private-sector tenants. However, a developer with a large site within the CEA and next to Metro, but outside downtown, has a good chance of landing a big federal lease that could jump-start development on their land — exactly the formula that can result in a parking crater while an owner waits for a deal.
One recent deal on the market illustrates the point: the GSA recently sought proposals for a new Department of Labor headquarters. GSA wants the new headquarters to be within the District’s CEA, within 1/2 mile walking distance to a Metro station, and hold 850,000 to 1,400,000 square feet of office space.
The kicker is the timeline: GSA wants to own the site by April 2018, and prefers if DC has already granted zoning approval for offices on the site. It would be difficult for a developer to buy, clear, and rezone several acres of land meeting those requirements within the next two years, so chances are that the DOL headquarters will be built on a “parking crater” somewhere in DC. Somewhere outside downtown, but within the CEA, like:
- “Spooky Park,” or Parcel A at The Yards, formerly the National Geospatial-Intelligence Agency offices across from the Navy Yard Metro. It’s zoned for 1.8 million square feet of offices, and is probably the largest single parking crater in DC.
- Behind the Big Chair in Anacostia are several parking lots that could house a million square feet of offices.
- The Portals, next to the Mandarin Oriental Hotel at 14th and D streets SW, has two empty lots left. A residential tower will soon sprout on one, but the other is being reserved for another office building, across from to another building that was built for the FCC, but which will soon be vacant.
- The two blocks just west of the Wendy’s at “Dave Thomas Circle,” in the northwest corner of NoMa, are owned by Douglas Development and Brookfield Asset Management. Brookfield’s site could house 965,000 square feet of development, and Douglas’ site could have a million square feet.
High-rise residential seems like it would be an obvious use for land like the Yards, which is outside downtown but atop a heavy-rail station. Yet even there, where one-bedroom apartments rent for $2,500 a month, it’s still more valuable to land-bank the site (as parking, a small green area, and a trapeze school) in the hopes of eventually landing federal offices.
Many federal leases are also signed for Metro-accessible buildings outside the District, which helps to explain why prominent parking craters exist outside of Metro stations like Eisenhower Avenue, New Carrollton, and White Flint. (For its part, Metro generally applauds locating offices at its stations outside downtown, since that better balances the rush-hour commuter flows.)
One reform could fix the problem
One esoteric reform that could help minimize the creation of future parking craters around DC is to fully fund the GSA. Doing so would permit it to more effectively shepherd the federal government’s ample existing inventory of buildings and land, and to coordinate its short-term space needs with the National Capital Planning Commission’s long-term plans.
Indeed, GSA shouldn’t need very many brand-new office buildings in the foreseeable future. Federal agencies are heeding its call to “reduce the footprint” and cut their space needs, even when headcount is increasing. Meanwhile, GSA controls plenty of land at St. Elizabeth’s West, Federal Triangle South (an area NCPC has extensively investigated as the future Southwest EcoDistrict), Suitland Federal Center, and other sites.
However, ongoing underfunding of GSA has left it trying to fund its needs by selling its assets, notably the real estate it now owns in now-valuable downtown DC. GSA does this through complicated land-swap transactions, like proposing to pay for DOL’s new headquarters by trading away DOL’s existing three-block headquarters building at Constitution and 3rd Street NW.
In theory, it should be cheaper and easier for GSA to just build new office buildings itself. In practice, though, they’ve been trying to do so for the Department of Homeland Security at St. Elizabeth’s West, and Congressional underfunding has turned the process into a fiasco.
Parking craters will slowly go away on their own
In the long run, new parking craters will probably rarely emerge in the DC area. Real estate markets have shifted in recent years: offices and parking are less valuable, and residential has become much more valuable. This has helped to fill many smaller parking craters, since developers have dropped plans for future offices and built apartments instead.
Even when developers do have vacant sites awaiting development, the city’s growing residential population means that there are other revenue-generating options besides parking. “Previtalizing” a site can involve bringing festivals, markets, or temporary retail to a vacant lot, like The Fairgrounds, NoMa Junction @ Storey Park, and the nearby Wunder Garten. This is especially useful if the developer wants to eventually make the site into a retail destination.
Broader trends in the office market will also diminish the demand for parking craters, by reducing the premium that big offices command over other property types. Demand for offices in general is sliding. Some large organizations are moving away from having consolidated headquarters, and are shifting towards more but smaller workplaces with denser and more flexible work arrangements.
Unlike the boom years of office construction, there’s now plenty of existing office space to go around. Since 1980, 295 million square feet of office buildings were built within metro DC, enough to move every single office in metro Boston and Philadelphia here. While some excess office space can be redeveloped into other uses, other old office buildings — and their accessory parking lots — could be renovated into the offices of the future.