District Plan Calls for 13% Reduction in Leased Space

"Studies have shown that the total life cycle cost is typically lower for owned properties than leased properties," the report said. The case for this approach includes the ability to amortize the purchase over a 20 to 30 year time-frame; protection against escalating land value and rents; locked-in space cost for a longer period of time; and the ability for the District to finance at a lower interest rate than a private builder.

As such, over the next three years the District wants to reduce its leased space portfolio by approximately 13% from 3.7 million square feet to 3.2 million square feet. It will do this through the delivery of several facilities now under development that it will own, including the Consolidated Forensic Laboratory and the Minnesota-Benning Government Center, as well as repurposing closed schools and centralizing warehouse operations.

The total District-owned space is approximately 18 million square feet--the largest component in this category is, not surprisingly, schools. The leased space portfolio is comprised primarily of office, but also includes warehouse and neighborhood space. The plan notes that many of the current leases were entered into during the period from the late 1990s through 2001. Typically, these leases had 10-year terms and have recently expired or are expiring soon.

For example, the Office of the CFO at 941 N. Capitol St., NE maintains a 188,455 square foot lease that is expiring this year. The city plans to end that lease and relocate the office to the Waterfront. Healthcare Finance & Health's 149,255 square foot lease at 825 N. Capitol St is also expiring. The city plans to consolidate that department in various locations.