The federal government’s overseer and manager of real estate has terminated its lease agreement with developers to build a planned headquarters for the Securities and Exchange Commission in Washington, D.C.’s NoMa neighborhood.
The General Services Administration said it ended the agreement with Cayre Jemal’s Nick, an affiliate of Douglas Development and Midtown Equities, to build the 1.2 million-square-foot facility planned at 60 New York Ave. NE, near the NoMa-Gallaudet Metro station.
The agency cited the developer's inability to secure financing for the project in a statement emailed to CoStar News late Tuesday.
“Despite multiple attempts by GSA to find a mutually beneficial solution since the spring of 2023, CJN has been unable to demonstrate its ability to finance [the] construction of the building, as required by the lease, and the project has yet to proceed past the initial phase,” a spokesperson said in the statement. "Because of this, GSA has determined that it is in the best interest of the government to terminate the contract and it did so today.”
The nixed plan for the new headquarters for the SEC — the agency that monitors publicly traded companies to make sure they adhere to federal securities laws — follows an announcement from the GSA in early August, when it said it plans to shrink office space occupied by the Department of State, the Department of Housing and Urban Development, and some Treasury Department agencies.
The SEC's lease was one of D.C.'s largest public-sector real estate commitments when it was signed in 2021. The deal included a new 15-year lease, with the option to extend for an additional 10 years.
Douglas Development did not respond late Tuesday to a request to comment on the GSA's announcement.
Consolidation efforts
The termination of the deal comes just over a month after the GSA awarded Clark Construction a $524 million contract to build the Cybersecurity and Infrastructure Security Agency's new 630,000-square-foot headquarters on the St. Elizabeths West Campus in Washington, D.C.
The cybersecurity agency project stood out against a backdrop of cuts made by the federal government in an effort to adjust to the impact of flexible work and consolidate its massive real estate portfolio.
The agency has opted to let the leases for three Department of State offices in Washington and Northern Virginia lapse and consolidate employees into locations the agency already leases or are federally owned.
The GSA in October 2023 signed a five-year extension of its lease for the SEC's current 712,000-square-foot headquarters at 100 F St. NE at Station Place, according to CoStar data, about a mile away from the planned campus. The extension suggested the agency would not be moving any time soon.
The GSA said in the statement that it "remains committed to finding a cost-effective housing solution for the SEC to support the vital mission it performs for the American people."
As the region's largest office occupant, the federal government's cuts have made it especially challenging for the Washington area to build meaningful momentum to aid in its post-pandemic recovery.
The city's record-high vacancy and availability rates have largely been attributed to many federal government agency staff still working remotely.
Availability in D.C.'s East End — the sixth-largest office market in the country by total inventory and home to many GSA-leased and -owned properties — surpassed 25% by the end of last year, according to CoStar data, and it has struggled in the face of plummeting rents and valuations.
Federal government agencies account for about 20% of the jobs in the Washington area, according to CoStar analysis.