WASHINGTON – It is leasing manager Jud Williams’ job to fill all 1.6 million square feet of space that Corporate Office Properties Trust controls at the sprawling National Business Park in Annapolis Junction.
Williams, who recently signed two tenants for a total of 266,500 square feet of space, is not worried.
“We can’t keep up with the demand for space,” Williams said of the office park in the shadow of the National Security Agency.
A continuing NSA commitment to outsourcing government work, combined with a sharp spike in defense spending in Maryland, has created what one real estate official has called “a perfect storm” for development in the Fort Meade area.
“The rebirth of the NSA after 9/11 has become a driver for established contractors, and (business) incubator spending has risen sharply,” said Tim Cahill, senior managing director at the Baltimore office of commercial property giant CB Richard Ellis. “Add to that the fact that nearby BWI is the fastest growing airport in the country.”
Data released Thursday by the U.S. Census Bureau bears out the boom in defense spending now seen in Anne Arundel County, home of the NSA.
The bureau’s Consolidated Federal Funds Report, released Thursday, said Anne Arundel County businesses got about $1.16 billion in defense procurement contracts in fiscal 2003. That was a 31 percent increase over the total for fiscal 2002, and an 85.5 percent jump in defense spending since fiscal 2001.
The county’s increases outpaced both the state the nation in the same periods. Defense contracting in Maryland rose 14 percent from fiscal 2002 to 2003, and 47 percent from 2001. Nationally, the numbers went up 17 percent over the one year, and 29 percent from fiscal 2001 through fiscal 2003.
At the same time, defense contractors in the area have benefited since 2000 from NSA policy favoring the outsourcing of many information-technology jobs, said Bill Badger, president and CEO of the Anne Arundel Economic Development Corp.
Badger said Lt. Gen. Michael V. Hayden, the head of the spy agency, has “aggressively reached out to the best and brightest in the private sector for a number of years.”
The outsourcing initiative picked up steam in the summer of 2000 with the appointment of Maj. Gen. Harry D. Gatanas to oversee the agency’s acquisition process. At the time of the appointment, Hayden said the agency would leverage private-sector expertise to keep its information technology infrastructure safe and up to date.
Badger said Hayden’s plans were slowed as the agency’s budget and personnel numbers declined, but that all changed after the attacks of Sept. 11.
Consequently, Fort Meade and the wider Anne Arundel County area has become one of the hottest in the Baltimore, Washington, and Northern Virginia markets, said Cahill, who has tracked commercial property developments in the region for 15 years.
“Most sub-markets in the area, like Tysons Corner (Va.) and the I-270 tech corridor, are still recovering from the real estate recession of 2000,” Cahill said. “But Anne Arundel County has recovered faster than any other.”
That’s been good news for Williams. Just last month, defense contracting giant Northrop Grumman agreed to lease 104,000 square feet at the Annapolis Junction he manages and that deal was followed weeks later by an agreement with contractor Booz Allen Hamilton’s for 162,500 square feet.
Officials with both Booz Allen Hamilton and Northrop Grumman acknowledged the desire for space in Annapolis Junction was to be close to the agency, “as well as other clients.” But because NSA’s budget is classified, neither they nor many of the contractors now ringing the area would speak publicly about the nature of their relationship with the agency.
Northrop Grumman spokeswoman Debbi McCallam said the company’s new facility in Annapolis would house roughly 300 new employees focused on administration and engineering.
Williams said they will be working alongside counterparts at other big-name defense industry firms such as Boeing, General Dynamics and Lockheed Martin.
“Everybody in the park is involved in the defense sector,” he said.
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