Exclusive: Patent and Trademark Office may shed excess space in Northern Virginia

A significant portion of the Patent and Trademark Office’s roughly 13,000 employees may find themselves without an office to come back to as the federal agency reevaluates its space needs following a shift to more remote work.

The Alexandria-based gatekeeper for U.S. patents and trademarks is working with the General Services Administration on a plan to shed excess space in Northern Virginia previously occupied by employees now working from home under “maximum telework” imposed by the federal government to slow the spread of Covid-19, according to sources familiar with the situation. That could include relinquishing as much as a combined 1 million square feet in Arlington’s Shirlington area as well as its main headquarters in Alexandria’s Carlyle neighborhood.

Paul Fucito, a spokesman for the PTO, declined to disclose what options are on the table but confirmed it is a situation the agency is exploring.

“Like so many other businesses across America, we are constantly reevaluating our priorities in the face of the global pandemic,” he said in a statement. “Our real estate needs are just one of those priorities, and no decisions have been made at this time. Our goal is to ensure our 13,000 employees have what they need to serve American inventors and entrepreneurs and advance our world-class innovation ecosystem.”

The effort also comes at a difficult time for the office market in Northern Virginia as a whole and in Alexandria and Arlington in particular. The city’s office vacancy rate hovers at about 24%, per Cushman & Wakefield, while Arlington stands at just shy of 20%. Northern Virginia’s vacancy rate stands at 18.6%.

The timing of the reevaluation is awkward for the federal government and its landlords. The GSA renewed PTO’s Arlington lease for about 190,600 square feet in January 2020 and is locked into annual rental payments of $4.65 million through January 2035, per the GSA’s most recent leasing inventory. The building, which houses PTO operations and functions including parts of the offices of the chief administrative officer, chief information officer, patents and patent and trial appeal board, is owned by an affiliate of Easterly Government Properties Inc. (NYSE: DEA). A representative for Easterly declined to comment.

The PTO’s main headquarters is in Alexandria, where its lease for nearly 2.4 million square feet at an annual rental rate of nearly $73 million is slated to expire in August 2024. That opens up the possibility the agency will look to give back excess space as part of lease renewal discussions with the property’s owner, an affiliate of Lcor Inc., as a longer-term measure.

In the interim, the PTO and the GSA are weighing options including reassigning part of its space to other federal agencies or offering it up to nongovernment tenants through a sublease, according to two sources familiar with the situation. Representatives for LCOR could not be reached for comment. A GSA spokesperson confirmed discussions with the PTO are ongoing.

RECOMMENDED

“The pandemic has offered unique challenges to federal agencies,” the spokesperson said. “GSA and PTO continue to collaborate about their requirements and any information is pre-decisional/deliberative and unable to be shared at this time.”

The PTO has been a longtime proponent of telework policies, even before the pandemic. That has not always been to great effect. In 2014, about 8,300 patent examiners repeatedly lied about the hours they were turning in, according to an internal agency report. Investigators at the time said oversight of the agency’s telework program was “completely ineffective.”

Source