As we’ve reported in numerous postings throughout the past year (click on “BRAC” in the “Categories” to the right), the Base Closure and Realignment (BRAC) process has led to the closure of more than 350 military bases—and the shifting of many military operations from one base to another—since 1988. The most recent (2005) round of base closings and realignments now wrapping up continues to have a huge impact on Department of Defense (DoD) property throughout the nation. This is the second piece in our series on individual military installations and how they—and related real estate uses in the surrounding area—are changing as a result of BRAC-related movements.
Aberdeen Proving Ground (APG)—which has become a DoD “megabase” as the result of BRAC moves—has undergone an unprecedented transformation in recent years, evolving from the “home of ordinance” to the Army’s research and development “high-tech hub.” The Army’s oldest active proving ground, APG was established in northeast Maryland on the shores of Chesapeake Bay in October 1917, just six months after the United States entered World War I, for the production and testing of Army materiel. At the same time, the Edgewood Arsenal was established nearby to develop, produce and test chemical warfare materiel. In 1971, the two installations were officially joined as APG, which now occupies about 72,500 acres, more than half of which is water or wetlands. The property contains 7 million square feet in more than 2,000 buildings, including offices; administrative, research and training facilities; warehouses; and barracks and family housing. With more than 21,000 civilian, military, and contractor employees, it is the county’s largest employer—and one of the largest employers in the state.
The latest BRAC round, which was officially completed in September 2011, brought more than 6,500 employees and more than $1 billion in new construction to the base. The Army added 2.8 million square feet of facilities in 18 buildings; demolished 140 outmoded buildings; improved nine miles of roads; and upgraded electric, water and information technology infrastructure. Eleven organizations (primarily from New Jersey’s Fort Monmouth, which was shut down) moved to APG as part of BRAC, while three—most notably the Army Ordnance Center and School, which had been there for 92 years—departed. The largest group to arrive at APG—the Army Team C4ISR—focuses on command, control, communications, computers, intelligence, surveillance and reconnaissance efforts. The Army constructed a 2.5 million-square-foot, 13-building complex (dedicated last September) to house this group’s more than 5,000 personnel.
The second-largest group to relocate to APG, the U.S. Army Test and Evaluation Command (ATEC), moved 610 employees from the Crystal City/Pentagon area of northern Virginia into a new 141,453-square-foot headquarters last September. ATEC was joined by the U.S. Army Evaluation Center (AEC), which combined its staff from the Alexandria, Va., area with AEC staff already at APG.
The BRAC process also has had a dramatic impact on the area surrounding APG. With developers and landowners expecting the area to absorb as many as 27,000 new contractor jobs, the amount of office space has more than doubled in the past year. But most of those relocations have not yet happened, resulting in a (presumably temporary) office vacancy spike to more than 30%. Despite the delay in the absorption of this new office space, we expect BRAC to result in significant long-term benefits for Harford County.
Interestingly, some of the new development around APG—both on and off the base—is taking place through an Army Enhanced Use Lease (EUL) Program agreement with a private developer. The EUL allows APG to ground lease “temporarily underutilized” land and to use the proceeds from that lease for facility improvements and maintenance. Through the terms of the EUL, St. John Properties, a Baltimore-based developer, is building a 416-acre office and R&D complex known as The GATE Office and Technology Park both inside and outside APG’s secure perimeter. The multiphase project ultimately may include up to 3 million square feet of new spec office and R&D facilities that will be leased to defense contractors and military and other government agencies. The most recent issue of Real Estate Alert noted that St. Johns was shopping its leasehold interest in The GATE. The article reports that the project currently has 10 mid-rise and single-story office buildings totaling about 600,000 square feet. The sale is anticipated to bring in about $150 million, indicating an initial yield of 7.9%.
