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WASHINGTON, DC-The US General Services Administration, the government’s real estate arm, has found a 309,000-sf, discarded space to lease on behalf of the Department of Education at the Potomac Center, a new $220-million office complex on the waterfront. The designated space in the soon-to-be completed, 430,000-sf office tower was to become the new headquarters of the Federal Emergency Management Agency until the organization decided in December to break what published reports say was a 10-year, $100-million build-to-suit lease with developer JBG-JER Companies. Now 1,000 Education Department employees will move into the offices at 550 12th Street SW late next year.

“The Potomac Center is an excellent location, near public transit and the Department of Education’s headquarters,” GSA regional administrator Donald C. Williams says of the recently announced decision. “GSA acquired this space in Potomac Center at below market rents for a 10 year lease. This is a good deal for the Department of Education, and for the American taxpayer.” FEMA backed out of the deal to relocate 1,200 employees to the Potomac Center from its current headquarters–located in 271,000-sf of space just a few blocks away at 500 C Street–after citing September 11-induced security concerns.

FEMA had been the first tenant to get on board the Potomac Center project. When FEMA negotiated its lease at the end of 2000 with JBG-JER Companies–a partnership consisting of JBG Companies and JE Robert Companies–the government organization had struck what would be the biggest non-renewal lease transaction to take place in the District that year.

It will still be some time before the Potomac Center–which will occupy an entire city block between Maryland Avenue and 12th Street–reaches full completion. The project entails the complete reconstruction of an existing, 700,000-sf building, and the demolition and replacement of a 270,000-sf structure. Ultimately, the complex will consist of the looming, 12-story North and South Towers, accounting for approximately 1 million sf of space. There will also be three floors of below-grade parking capable of accommodating up to 800 vehicles.

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