Metro released plans on Thursday, July 12 to sell its headquarters building situated downtown one block over from the Capital One Arena. The maintenance the building needs isn’t cheap and Metro thinks it can get a good amount of money for the location. However, some of the building’s characteristics could make it a difficult sale.
Metro moved into its current headquarters in the Jackson Graham Building (JGG) located at 600 5th Street Northwest in 1974, two years before the Metrorail system opened for service. Nearly 1,400 Metro employees work out of the 270,000-square-foot building, and some of the authority’s backend infrastructure lives within as well.
Selling has been on Metro's mind for awhile
Prior reports commissioned by Metro have recommended putting the building up for sale. Real estate company Jones Lang LaSalle (JLL) performed a valuation of the building in 2002; DC suggested that Metro might move its headquarters from JGB to Anacostia in 2006; and McKinsey recommended that Metro study a sale of JGB in 2016. The agency hasn’t acted upon those recommendations until now.
Metro wants to sell its headquarters for a few reasons, but primarily because it’s expensive. It isn’t up to current fire code (the building doesn’t have sprinklers, for instance) and a good portion of its infrastructure needs to be replaced. A Metro board presentation from 2016 says that the heating, ventilation, air conditioning, plumbing, electrical systems, and roof either already or will soon need to be replaced — no cheap task. Two of the air chillers used for the building’s datacenter are over 40 years old, and 14 others are older than 25.
In order to get the most money for the land, Metro has applied to the DC Office of Zoning to change the type of zone the headquarters is on to make it more enticing to buyers. Metro estimated that if the rezoning takes place and if JGB is demolished to be replaced with a new building, the authority could be looking at a sale of anywhere between $68 and $132 million.
While moving out of its current headquarters, Metro’s staff recommend that they vacate other buildings as well and consolidate employees in central facilities in DC, Virginia, and Maryland. The consolidation would merge 10 facilities down to seven, and Metro staff believe they could save up to $39 million of operating costs and $96 million of capital budget costs over 20 years.
The new DC office would preferably stay centrally-located near a rail junction and would still be sizeable, anywhere from 100,000 to 250,000 square feet. Once the new DC headquarters building is chosen, Metro would determine how big the Virginia and Maryland buildings would need to be, and then buy or lease them. Simply renovating the current headquarters and not selling it could cost $17.2 million, according to a Board of Directors presentation.
The move won't be simple
Selling the current headquarters poses has some roadblocks, though, due to the number of unique oddities that the building has which any future buyer would need to work around.
The Red Line runs at a diagonal beneath the third level of the basement, for instance. When heading east from Gallery Place, the line turns southeast and snakes through the basement before arriving at Judiciary Square. The tunnel isn’t going anywhere.
Outside of the building are vent shafts which feed air to and from the train tunnels below, but limit how close a future structure could be to the road. Large air chillers that take up much of the building’s roof supply cool air to nearby stations including Gallery Place and Judiciary Square and run under the streets. If those are moved, the piping beneath the roads could need to be replaced as well, which would be costly and potentially time-consuming.
Two less permanent but still important pieces of the Metro network would also drive the complexity of a headquarters move. One of the two datacenters which hold and power the IT behind Metro is located within JGB. Those servers and equipment would need to move elsewhere. There’s also a backup Rail Operations Control Center in the building that Metro still uses on occasion for disaster-recovery and redundancy purposes. Its equipment and communications lines would also need to be relocated somewhere else.
A lot of Metro’s plans come down to how much the authority can make by selling the building. If the buyers that JLL find happen not to want to pay what Metro expects, it could tip the balance from a suggested sale to simply a major renovation of the building. But to even get to that point Metro awaits its rezoning decision, which they expect sometime in fall 2018.
But hey, what are a few little quirks when you can be one block from the main sports arena in the District of Columbia?
Metro Reasons is a regular breaking news, investigative reporting, and analysis column by Stephen Repetski about everything Metro. Please send tips to Metro Reasons.