The Arlington County Board approved an incentive grant that will keep the Drug Enforcement Agency’s headquarters in Virginia’s Pentagon City.
The county will give DEA’s headquarters landlord, Clarion Partners, a $11.5 million Economic Development Incentive grant, stretched out over the 15-year term of the DEA’s lease renewal for its headquarters space at 600 and 700 Army Navy Drive, to offset its below market lease terms to GSA.
The Clarion lease renewal was $36.50 per square foot, compared to the market rate of $43.00 per square foot.
Clarion Partners also agreed to invest $82 million into a full interior renovation of the headquarters, and give DEA 75,000 square feet of temporary space in Crystal City during the renovations.
The DEA headquarters is more than 500,000 square feet and about 3,000 people work there. Losing that tenant would have increased Arlington County’s office vacancy rate by almost 1.3% (although that would have been offset by the arrival of Amazon’s headquarters leases).
Arlington County’s office vacancy rate is currently 17.4%.
In 2016, GSA began a search for a new DEA headquarters. The competitive procurement process placed price as the determining factor.
“Ever since the Base Realignment and Closure process began in 2005, our strategy has been to retain large federal office tenants, such as the DEA, who occupy a lot of office space and provide a lot of jobs. In this instance, we felt the DEA’s importance to Arlington warranted the incentives we offered,” said County Board Chair Christian Dorsey.
The county said DEA will generate net tax revenue of more than $31 million for the county over the next 15 years. Its employees also contribute about $450,000 a year to the county.
The Arlington County Board voted unanimously in favor of the grant.
The staff report is available online.