Washington Business Journal by Daniel J. Sernovitz

The Advisory Board Co. has reached a deal to shift its headquarters to Mount Vernon Square, a major economic development win for the District after a national search that included the still-vacant 1812 N. Moore St. skyscraper in Rosslyn.

Advisory Board, a publicly traded consulting company with 2,000 local employees, is finalizing a lease to anchor Douglas Development Corp.’s planned 655 New York Ave. NW, the site once expected to be the new headquarters for LivingSocial Inc. The deal is contingent on approval of an incentive package Mayor Muriel Bowser will introduce to the D.C. Council on Sept. 22.

“We’ve been in D.C. for 35 years and have grown substantially during that time, have hired lots of people here in the District over many years and have done a ton of community service work that’s part of our mission in the city, and will continue doing all those things going forward, so we’re very excited,” Advisory Board CEO Robert Musslewhite said.

Starting in 2019, the company would lease about 500,000 square feet at 655 New York Ave., a roughly 720,000-square-foot project next to the Washington Convention Center, and commit to creating at least 1,000 new jobs over the next decade.

Bowser’s proposed Local Jobs Tax Incentive of 2015, crafted with support from Chris Ahn, executive vice president of government and corporate affairs at the Washington, D.C., Economic Partnership, would offer the Advisory Board a tax abatement package worth an estimated $60 million over 10 years. The deal is expected to generate about $300 million in net new real estate and other taxes over course of the 16-year lease.

“Keeping an influential company like The Advisory Board Co. in Washington, D.C., is a testament to the attractiveness of our market, our competitive strength, and our laser focus to hire District residents and keep jobs right here in D.C.,” Boswer said in a statement. “This is a big win for our city.”

The District, after losing Intelsat S.A. to Tysons, took a far more aggressive stance toward retaining the Advisory Board (NASDAQ: ABCO) and doing what it could to ensure it was able to grow in D.C. Bowser has put a significant amount of emphasis in her administration on technology companies since assuming the office in January. The Advisory Board, which works with more than 5,000 health care and higher education firms across the world, fit the bill and was an early priority in Bowser’s administration, said Andrew Trueblood, chief of staff with the Deputy Mayor of Planning and Economic Development.

The company retained real estate brokerage JLL in July 2014 to help it explore alternatives to its current 300,000-square-foot headquarters at 2445 M St. NW and 1227 25th St. NW. Musslewhite said the Advisory Board decided on 655 New York for several reasons, chiefly to continue its volunteer work in the District, provide an engaging location for employees and visitors and ensure a financially responsible deal. Advisory Board has locations across the U.S., including in Chicago, Richmond and San Francisco, each of which could have been in play if the company could not settle on a preferred location in the District.

JLL’s Greg Lubar was the lead broker representing the company, along with JLL brokers Trip Howell, Amy Bowser and Marshall Durston. CBRE brokers Randy Harrell and Mark Klug represented Douglas Development. The Advisory Board picked Douglas Development’s project over a competing site by Boston Properties Inc. and Steuart Investment Co. at 1001 Sixth St. NW, also near Mount Vernon Square. It also looked closely at Monday Properties’ 1812 N. Moore St., the tallest building in the region that has sat vacant for nearly two years.

As part of the performance-based incentive package, the Advisory Board will be eligible for up to $6 million a year in real estate tax abatement as long as it meets its job creation targets. The mechanism for that, either passed through Douglas Development through its rent or granted to the Advisory Board as a rebate, is still being worked through as part of the legislation. The company has also agreed to a host of community benefits, including pro-bono work with local nonprofits and to award at least 35 percent of its tenant-improvement costs to D.C. Certified Business Enterprise companies.

The Advisory Board can begin hiring workers toward its overall employment goal as soon as it signs its lease but will not be eligible for its first tax abatement until 2020, the first full year of stabilized rent in its new location. What's more, the District's exposure to the abatement program is only as a net gain, and Advisory Board will not receive any tax abatement unless it meets its goals. The company is among the largest publicly traded firms based in D.C., with an average salary of around $100,000.