Citing continuing Pentagon cutbacks, the National Security Agency intends to abandon nearly one-quarter of its leased office space near Baltimore-Washington International Airport by July, the government confirmed yesterday.
The NSA's pending move from four buildings totaling 275,000 square feet -- roughly equivalent to the 28-story Legg Mason Tower downtown -- is expected to have serious negative ramifications for the BWI office market, raising the vacancy level there nearly 10 percent.
"Every government agency is downsizing, and at the NSA we wanted to limit our exposure to leased office space because we needed to reduce our operating costs," said Steve McAnallen, an NSA spokesman.
Employees affected by the downsizing will be moved into space within the NSA's Fort Meade headquarters, Mr. McAnallen said. The NSA, the Army's electronic-intelligence gathering arm, monitors telecommunications and satellite transmissions and provides other surveillance.
With the NSA relocation from the Airport Square complex in Linthicum, the office vacancy rate in the BWI market would jump to 26 percent, making it the highest level in the Baltimore metropolitan area. Baltimore currently has the most office space available, with one in four square feet empty.
"This space will not be removed from the market in a 12-month period, unfortunately," said Bert Haus, a vice president of Airport Square Cos., developer of the $140 million complex. "But there continues to be activity, and if we can continue to capture a fair percentage of that activity, I think the space can be absorbed in a rational period."
The added vacancy caused by the NSA follows other office losses in Anne Arundel County, the result of significant downsizing and consolidation by other defense contractors, such as Westinghouse Electric Corp.
Three years ago, Westinghouse abandoned four of the 26 Airport Square complex buildings when it moved into the new $55 million West*Quest Technical Park, also in Anne Arundel. Although two of those buildings have since been leased by Cadmus Journal Services Inc., MCI Telecommunications Inc. and others, two others containing 183,000 square feet remain available.
"This will add at least a couple of years to the real estate recovery process in the BWI market," Gregory E. Masi, an associate vice president of the commercial real estate brokerage firm Carey Winston Co., said of the NSA relocation. "It's just like Baltimore City's central business district -- every time you think it's stabilizing, something else happens."
The NSA's defection from Airport Square also occurs despite agency growth elsewhere in the county. In July 1992, the NSA signed a lease with Constellation Real Estate Group Inc. to occupy a 12-story, 250,000-square-foot office tower in the National Business Park, adjacent to Fort Meade.
The agency, through the U.S. Army Corps of Engineers, also has contracted to occupy a new $10 million, 281,000-square-foot industrial building about three miles from its headquarters.
Furthermore, the Corps is completing construction of a $47 million facility at Fort Meade that will contain state-of-the-art computers and other equipment.
Even with the loss, the NSA will continue to be a major tenant within the 124-acre Airport Square complex, which contains 2.5 million square feet of office space. The NSA still will occupy more than 1 million square feet in five buildings. More than $14 million worth of renovations are under way on one Airport Square building, which the NSA eventually may purchase.
"The good news is there doesn't appear to be any job reductions coming as a result," said Michael Lofton, chief executive officer of the Anne Arundel County Economic Development Corp.