Military Bases Offer Surplus of Opportunities
When one door closes, another opens. The government’s Base Realignment and Closure (BRAC) is opening up all kinds of development and redevelopment opportunities in the commercial real estate world that is starved for approved projects. Interested companies send out a swarm of proposals as the 2011 deadline to close 25 bases, and realign 24 others, is fast approaching.
Corporate Office Properties Trust (COPT), Jim Wilson & Associates (JWA), and Fort Harrison Reuse Authority (FHRA) are just some of the players gearing up right now. More firms are expected to join as the Department of Defense ups its annual spending on military construction to a massive $25B, in addition to $7.4B in federal stimulus funds that will go toward military projects through 2013.
It’s only natural that closed military bases will spur immense redevelopment work as such sites, some spanning more than 1,000 acres, make for great master-planned communities and often garner help from local agencies for permits and funding. For once, NIMBYs also support the growth, as the empty sites pose economic and physical danger to the surrounding area with their heavy contamination.
Besides redevelopment ops, developers can also look at prospects on and off site where relocations are set to happen. By next year, BRAC will pump up the population at some forts by 3,000 to 4,000 people, not to mention several thousand more who will relocate to the surrounding areas. Additional space will be needed to cope with the influx, and in many places this means billions of dollars worth of projects. At Fort Belvoir, Va., an investment of roughly $4B will take care of the expected traffic coming to the area. Roughly 20 different projects are under development, totaling 6.2 million s.f. Meanwhile, Camp Pendleton in San Diego County is in the middle of a $3B makeover, which includes a new $563M hospital.
COPT and JWA embark on a 4.6 million-s.f. project in Huntsville, Ala., in a move that marks COPT’s entry into an area, where it hopes to become a dominant player. Redstone Gateway will be a master-planned site adjacent to the Redstone Arsenal Army Base built over a span of two decades. The JV will control the site at a low cost due to a 40-year enhanced-use lease awarded to JWA by the U.S. Army. The 468-acre pedestrian-oriented campus will have 4.4 million s.f. of Class A office space, including 1.2 million s.f. of secured office space. Businesses that need proximity to the base, especially those with specific security requirements, will be targeted for occupancy. The city will provide $76M worth of TIF for a 35-year period.
The Lawrence, Ind., skyline will be transformed with the development of the 100-acre Lawrence Village on Fort Benjamin Harrison Army Base. FRHA oversees the development, which is on tax exempt land due to its former designation as a military facility. Split into three plots, the plan calls for 13 acres of office and residential space; 31 acres of retail, office, residential and institutional properties and 14 acres of retail, office and high density residential. The project’s infrastructure is financed by an $11M bond, of which $1.5M is for debt servicing and about $9M is for actual construction.
FHRA Executive Director Kris Butler sees a surge of interested retailers for the project but a lack of willing developers due to financing issues. But a hospital has expressed interest in building a clinic and an office. The residential portion, however, is already humming with activity. The firm hopes to break ground by mid-2011 and complete construction by 2012.
--Carla Zeineh
czeineh@crittendennews.com
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