TSA to shrink office space per employee to 173 GSF in move to Alexandria

The Washington Business Journal reported yesterday that the Transportation Security Administration (TSA) plans to move its headquarters from Pentagon City to a long vacant building in Alexandria beginning this year.  It goes on to state:

Under the agreement, the TSA will fully occupy the building by the spring of 2018 at a rental rate of $36 per square foot. That rate, per the GSA, is more than 25 percent below projected market rents. The agreement also provides the government with $50 million for tenant fit-out costs and other transition-related expenses. The utilization rate (square footage per employee) will be roughly 153 — 20 percent below the GSA's current rate.

We believe the "utilization rate" described here is what is known as "leasable space" or "RBA" in the commercial real estate market.  This is the space actually leased by a tenant.  It includes all the space occupied by employees plus a proportional share of common areas available in an office building.  So TSA has leased about 153 SF of space for each employee.  By our calculations, the actual space occupied by employees runs about 3/4s of leasable space.  That means, on average, each employee be about 116 SF.

For planning purposes, Fairfax County uses 300 gross square feet (GSF) per office employee.  Our calculation suggests that leasable space is about 88% of gross square footage.  This means that each TSA employee will occupy about 173 GSF in its new quarters, less than 58% of the County's planning value.  Other, generally private, leasees of office space have occupied even much smaller office space per worker on a GSF basis in our area in recent years as we have documented repeatedly on this blog (see index "office space"). 

Two key points arise from this analysis:

• It is likely that in the next decade leasing of Washington area office space will run about half of what the County expects (and that doesn't count adverse market conditions) as businesses and the federal government stick more employees in less space.

• More dangerously, over the longer term--3-4 decades--the number of office employees in key employment centers such as Tysons and Reston could be TWICE what the current County plans call for because of bad planning assumptions.  The infrastructure costs (primarily transportation) to support that level of employment will be huge and haven't been considered.

While we tire of repeating the same argument--that office space per employee is shrinking by at least half--we will continue to do so until Fairfax County at least understands and recognizes this phenomenon in its planning and zoning efforts.