BRAC is Back?

The last round of Base Closure and Realignment (BRAC) was announced in 2005 and completed officially last year.  In a press conference today, Secretary of Defense Leon Panetta announced that DoD is planning for another BRAC round as part of the FY 2013 Defense budget.  This round is meant to accommodate an expected $487 billion in budget reductions by 2022.  The proposal includes a reduction of 80,000 Army soldiers and 20,000 more from the Marines.  The Air Force and Navy would retire older airplanes and ships and delay other projects.

President Obama will submit the BRAC request with his FY 2013 budget on February 13th.  However, both the Congress and the Senate will need to approve the request before the BRAC process can become law.  Normally, once authorized, the entire process of base closure and realignment can take several years – the 2005 round was not completed until 2011.

Its too early to determine now what these changes could mean for U.S. real estate markets, and until DoD submits its list of proposed base closures to the BRAC Commission, the specific impact of this next BRAC Round VI cannot be known.  Past BRAC rounds have had substantial direct impacts on the Washington, DC area, particularly the 2005 BRAC round which directed roughly 5.5 million square feet of DoD tenants out of leased space throughout Northern Virginia.  However, positive impacts are conceivable as well: the 1993 BRAC Round relocated nearly 1 million square feet of NAVSEA office tenancy from Crystal City across the Potomac River to the Navy Yard, in Southeast Washington, DC.  This move, along with growth from the defense contractors that followed, provided the catalyst for growth that has fully transformed that submarket today.

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