Corporate Office Properties Trust’s offerings at Redstone Gateway, its 470-acre mixed-use office campus in Huntsville, Ala., will soon expand with the addition of two new buildings at an aggregate development cost of $103 million. The structures, totaling 263,000 square feet, will sprout up as a result of two build-to-suit leases the developer just signed with Northrop Grumman Corp.
Redstone Gateway, located adjacent to the primary access point of the U.S. Army’s approximately 38,000-acre Redstone Arsenal in the Cummings Research Park submarket, occupies land owned by the U.S. Government under a long-term master lease agreement with COPT and joint venture partner Jim Wilson & Associates. Redstone Gateway has been consistently growing since the establishment of the 2010 joint venture and today, the mixed-use campus consists of a series of Class A office buildings, flex/R&D facilities, a data center, a hotel and retail space.
COPT, with an 85 percent stake in the partnership, acts as managing partner and oversees leasing and management of Redstone Gateway’s office segment. The REIT expects to complete the development of Northrop Grumman’s two new office structures in the second half of 2022.
“The delivery of space is somewhat slower than we could have normally done because of the extreme technology they’re adding to the buildings, including [Sensitive Compartmented Information Facility] and other high-computing kind of environments in that space,” Stephen Budorick, CEO of Corporate Office Properties Trust, said during the company’s third quarter 2021 earnings call on October 29.
Filling in the acreage
The second half of 2021 has proved an active period at Redstone Gateway, with COPT having completed two leases with a defense contractor in June for the $65 million development of two buildings encompassing a total of 178,500 square feet of office and R&D space. The REIT also executed a $60 million, 206,000-square-foot build-to-suit lease with the U.S. Government in September.
Upon completion of Northrop Grumman’s two build-to-suit office buildings, Redstone Gateway will consist of 2.2 million square feet. However, there’s ample room for additional growth, as the campus has a development capacity of approximately 4.5 million square feet.
Recipe for success
With the closing of the Northrop Grumman commitment, COPT has completed 1.2 million square feet of development leasing year-to-date, marking a nearly 20 percent increase over its goal. This achievement, however, comes as no surprise to COPT, as the company has exceeded its annual development leasing goal every year for the past 10 years, with an average of 1.1 million square feet of development leasing annually.
“This long-term development success is driven directly from our strategy of investing at priority defense mission locations, such as Redstone Arsenal, and there by creating value for shareholders, and delivering new modern and efficient properties to support our defense contractor and government tenants,” Budorick told Commercial Property Executive.
“Our company’s investment strategy is supported by the defense economy, which is funded by the United States Department of Defense and Intelligence Community budgets and aligned with priority national security needs of the United States. Accordingly, demand for our locations, such as Redstone Gateway, is driven by defense spending and national security requirements, rather than by traditional office fundamentals.”