Arlington Retains DEA in Pentagon City

Published on April 25, 2019

• Deal followed competitive bid process


• Federal law enforcement agency to stay in Pentagon City for 15 years


• DEA expected to generate $31 million+ in net tax revenue over 15 years


• DEA employees contribute about $450,000 per year to County in indirect revenue

The Arlington County Board today approved an incentive grant that will keep the headquarters of the Drug Enforcement Administration, part of the U.S. Department of Justice, in Pentagon City following a lengthy federal competitive bid process. The federal law enforcement agency occupies more than 511,000 square feet of space, and employs about 3,000 people at its Pentagon City location.

"The DEA is important to Arlington," County Board Chair Christian Dorsey said. "Ever since the Base Realignment and Closure process began is 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 — enough that their loss would have a significant impact on direct and indirect tax revenues and local commercial market stability. In this instance, we felt the DEA's importance to Arlington warranted the incentives we offered."

The DEA's continued presence in Arlington is expected to generate net tax revenue of more than $31 million for Arlington County over the next 15 years. In addition, the DEA and its employees contribute an estimated $450,000 per year to the County in indirect revenue through meals, sales and transient occupancy taxes. As part of the deal, Arlington County will provide an approximate $11.5 million Economic Development Incentive (EDI) grant, which is subject to square footage occupancy targets and will be distributed over 15 years.

The DEA is housed at 600 and 700 Army Navy Drive. The EDI grant would go to CSHV Lincoln Place LLC, the owner of the buildings for the purposes of providing a competitive lease rate to the federal government. The Board voted unanimously  to approve the incentive grant. To read the staff report, visit the County website. Scroll to Item No. 32 on the agenda for the Thursday, April 25, 2019 Recessed County Board Meeting.

Background

The GSA announced in 2016 that it would be opening a search for a new Drug Enforcement Administration headquarters when its lease in Pentagon City expired in September 2018. The law enforcement agency maintains both offices and the DEA Museum and Visitors Center at the location. At the time, Arlington's commercial office vacancy rate was 19.7 percent.

The GSA conducted a lengthy competitive procurement process, where price was the determining factor. Multiple properties with access to public transportation throughout Northern Virginia competed for the DEA headquarters. Through the EDI grant, Arlington was able to work with the property owner of 600 and 700 Army Navy Drive to provide as competitive a lease rate as possible to the federal government. Ultimately, the property owner of 600 and 700 Army Navy Drive was selected as the winning bidder.

The loss of occupied office space if the DEA left the County would account for an increase of nearly 1.3 percent in the County's office vacancy rate, which currently stands at 17.4 percent.

Arlington Economic Development

Arlington Economic Development (AED), part of Arlington County Government, is dedicated to the preservation and enhancement of an economically competitive and sustainable community, and the creation of exciting, diverse and amenity-rich places. AED provides visionary leadership and superior services to Arlington's business and arts community, its tourism industry and its real estate development. For more information, visit arlingtoneconomicdevelopment.com.