GSA Expands the CEA (but not far enough)

In response to an official request by Mayor Gray and effective May 23, 2012, GSA has expanded the District of Columbia’s Central Employment Area (CEA) to include the St. Elizabeths East Campus and the Capitol Riverfront Business Improvement District (highlighted in yellow) paving the way for federal agencies to locate there.

While the existing office supply in these two areas is very limited, Mayor Gray is hopeful that their inclusion will ultimately result in new economic development similar to the growth that NoMa (North of Massachusetts Avenue) experienced after receiving the critical designation.  However, with agencies operating under ever-restrictive budget and austerity measures, it’s unlikely that new development will occur any time soon.

In its comments regarding the expanded CEA, GSA also noted that “future Federal development near the St. Elizabeths Campus could be mutually beneficial to the District and the Federal Government.”  On the face of it, this makes sense.  What remains bewildering, however, is that GSA and the DC Government have not expanded the CEA into the city’s West End/Foggy Bottom submarket.  This area is adjacent to the CBD and it provides a lower cost alternative to the downtown core.  It has existing space available, in buildings owned by landlords searching for ways to generate demand in a sluggish market.  Further, it directly serves the State Department headquarters. The State Department has been the one federal agency to regularly lease outside the CEA. Why not further expand the CEA?

Want Capitol Markets articles delivered straight to your inbox?