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The Axe Falls

Base closings, new defense regulations spark exodus of federal employees and office leases.

An estimated 23,000 Defense Department employees in Arlington offices will be moved to other military installations throughout the United States, taking with them the revenue from about 2 million square feet of leased office space, U.S. Rep. Jim Moran (D-8) said Friday.

Following the release of the Department of Defense's Base Realignment and Closure Committee's (BRAC) list, Moran got word the offices, now subject to new security standards, are closing and there is little anyone can do about it.

"No matter how hard we try, it's unlikely we're going to effect any change," Moran said. "Our chances are remote."

Arlington, Moran said, will see the loss of the Defense Intelligence Systems Agency's (DISA) office on the Jefferson Davis Highway to Indianapolis along with that of the Missile Defense Agency's office at the Navy Annex Building to Alabama. Offices in Rosslyn, Crystal City — including one in the Crystal City II complex — and at Seven Corners will be lost to Fort Sam Houston in Texas. Army offices will relocate to Fort Belvoir — which will see a total of about 17,500 new personnel as defense agencies are moved — and to Aberdeen Proving Grounds in Maryland. The Marine Corps will be sent to Quantico, and Air Force offices are slated to move to Andrew's Air Force Base.

"We're not sure that's really all of it," said Moran, whose aides were still going through the list of office closures during a press conference. "But, they're not shutting down the Office of Naval Research in Ballston. It's a safe bet that 95 percent of the offices are going to close."

The deadline for the removal of Department of Defense offices, Moran said, is 2011, but the relocations will begin soon.

Defense agencies account for more than 60 percent of leased office space in Arlington — about 140 buildings. The closures come with the enactment of Department of Defense security standards that require defense installations to be set back 140 feet from public streets. The intent, according to DOD, is to safeguard offices from terrorist bombing. The ripple effect for the county's real estate market, Moran said, could be severe, but Arlington can make a recovery.

"Over the short term, it's pretty clear that lease rates are going to drop," Moran said, singling out areas like Crystal City, Pentagon City and Rosslyn as those expected to feel the most impact. "If you're near a Metro station though, it will be a blip for a few years and then I think you'll make a come back."

Moran also criticized the new DOD regulations.

"We've got to fight these security standards," said Moran. "They are irrational."

In a Monday meeting of elected officials, real estate executives and community leaders, he pointed out that the way they are applied is inconsistent and the set back requirement — designed to protect against only one kind of attack, a truck bombing — would do little to prevent a major terrorist strike like 9-11. Arlington County Board Chairman Jay Fisette said Friday that because the Department of Defense has yet to announce how it intends to pay for the office realignments, there is hope when it comes to saving some of the county's leased offices from the chopping block.

"Since this is due over the next six years and there's still the question of dollars, I don't think we should just let this go," said Fisette. "There will be another administration at some point."

Moving defense employees to Fort Belvoir, Moran said, will cause a drastic change in traffic patterns as personnel commute southward to Fairfax County. Fort Belvoir, he added, has no Metro station, and many local leaders are calling for the creation of one with federal money.

"It seems in DOD's interest," Moran said. "In a perfect world, it would have been done 10 years ago. Metro, of course, is going to have to make that a priority. If they want DOD people to be able to reach the Pentagon in any reasonable amount of time, they are going to have to have it."

County Board member Barbara Favola said the Department of Defense will have to make Metro a part of its plans.

"I think it should be part of the deal," she said. "There should be a rational solution to this. It will just wreak havoc if they are going to move forward without it."

Route 1 will also require improvements to handle added capacity. Chairman of the Fairfax County Board of Supervisors Gerry Connolly said the relocations are catching his jurisdiction off guard when it comes to transportation near Fort Belvoir.

"We're in the middle of a $35 million investment in that corridor, but none of that was in anticipation of this kind of seismic event," he said, adding that more emphasis should now be placed on completion of the Fairfax County Parkway. "This is completely overwhelming to us. We'll need assistance."

Fort Belvoir will see many DOD personnel who once commuted to the National Geo-Spatial Intelligence Agency in Reston now that its facility, Moran said, is slated to be moved. In Alexandria, Defense Department offices in the Hoffman building will be removed. A warehouse for the General Services Administration in Franconia will also be relocated. Moran added that an estimated 1,300 defense contractors will feel the impact of the DOD's new policies.

"The fact that most of these folks will not be relocated outside the Washington Metro area could mitigate some of this," he said.

The timing of the Defense Department's relocations is a bad one according to Stephen Fuller, an economist with George Mason University, who authored a report through the Northern Virginia Regional Committee on the subject.

"Arlington is the jurisdiction that's going to be most affected by this," Fuller said, adding that at the end of the current decade when the enforcement of the new standards is scheduled to be complete, Arlington's economy could be far weaker than it is now. The retirement of the "baby-boomer" generation and the cyclical machinations of the local economy, he said, are factors to consider.

"The timing is not particularly good for absorption," he said.

Fuller added that the effect of these changes are broader than anyone might realize, reaching into the retail and other sectors. "There's a ripple effect that will reach into other jurisdictions."

For the commercial real estate market, he said, the impact will be the most serious.

"It's a major change in the office market," he said. "Crystal City is going to have a hard time filling its space as it did when the Patent and Trademark Office left and the Navy Agencies. That market is more restrictive than others. It's a major disruption."

Moran said a more detailed list of office closures will be available next week.