Keeping Astronauts and Employees in Space

by CoyDavidson on September 29, 2010

The battle over NASA between the White House and Congress is coming to a head.

After months and months of political arm wrestling between the White House and Congress over NASA’s manned space program, much is happening this week in Washington in regard to NASA funding and a compromise bill between the House and Senate. It appears that the compromise bill will go before the House today for a vote under what is referred to as “under suspension of rules.” This means the bill must pass by 2/3 majority. Why is it being done in this manner? It limits debate time and does not allow for amendments, basically expediting the process. If no objections are forthcoming from the Senate, which approved the bill in August, then the compromise bill should be ready for the president’s signature by the end of this week.

The compromise, if approved as expected by the House, will be critical to Houston and Johnson Space Center as well as partially mitigate some of the 1,100 aerospace layoffs that NASA contractors forecast before the House-Senate-White House consensus was reached. It also will bring some direction to the nation’s $19 billion-a-year space program. Bob Mitchell, president of the Bay Area Houston Economic Partnership, said the compromise could protect as many as 350 of the 1,100 NASA contractor jobs slated to be eliminated.

What this means for the Clear Lake Office Space Market

In the event the Obama administration’s vision for NASA had proceeded as proposed, the impact would have likely been disastrous for the NASA-Clear Lake Office Market. The presidents plan combined with the scheduled end of the space shuttle program was projected to gut as many as 5,000 jobs from the approximately 20,000 employees at Johnson Space Center and related aerospace contractors in the Bay Area region.

Market Snapshot

The NASA-Clear Lake office market is small with approximately 5.9 million square feet of total office space inventory. NASA related office tenants account for approximately 33% of the total office inventory and approximately 40% of the currently occupied office space. United Space Alliance prime contractor for the space shuttle program, Boeing and Lockheed are the submarkets three largest office tenants. The end of the space shuttle program was expected to result in some job losses. However, prior to the Obama proposal many of those jobs were expected to be shifted to the Constellation program which the president proposed terminating. United Space Alliance has over 800,000 square feet of office leases maturing in 2010 and 2011. They have already opted not to renew their headquarters lease at 1150 Gemini which returns 158,000 square feet to the marketplace. In addition Boeing has placed 135,000 square feet of office space on the market in two separate buildings they own and occupy in the area.

The question now is how much more space comes back to the market from NASA contractors, as well as how long before NASA contractors gear back up under the new direction for NASA and absorbs this new expected vacancy. In the long run, the new direction of our manned space program could possibly have a positive impact on the region. However, in the short term there is going to be job losses and more office space returning to the marketplace. I should note that a significant proportion of space likely to be returned to the marketplace will come from buildings that have been primarily single tenant in focus and larger spaces occupied by NASA contractors. Building owners will likely be reluctant to carve these spaces up for smaller tenants and multi-tenant occupancy. As a result tenants with less than 20,000 square foot space requirements will not likely see a plethora of new space options.

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