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New Focus on Offices in Frederick
By Dana Hedgpeth
Washington Post Staff Writer
Monday, December 13, 2004; Page E01

Just off Interstate 270, in the small town of Urbana, Md., sits a brick office building that will soon be home to 250 employees who will run a data center for District-based mortgage giant Fannie Mae.

The new Fannie Mae building may not look like much to passersby, but it is part of a much larger project that over the next decade will add stores and restaurants, 3,000 houses and 2 million square feet of office space to a once-rural section of Frederick County.

Developers and county planners say the project is just what they want to attract to this growing region. Frederick County's population expanded by 42 percent from 1990 to 2003, according to Census Bureau data, and in the past few years, the county has experienced a boom in residential projects accompanied by big-box retail and chain restaurants.

But until now, most office development has been limited to small spaces for doctors, lawyers, accountants and other professionals. Now that the area it has a larger base of residents and an established retail sector, the next phase is to attract higher-end office projects, developers and county officials say.

"Frederick has been more heavily residential development, but now companies are finding their way out here to where the workers are," said Tom Natelli, chief executive of Natelli Communities, which is the developer for the office park that includes Fannie Mae's data center.

To stimulate commercial development, county planners recently rezoned 650 acres from agricultural use to office, research and light industrial uses. The rezoned land stretches north from the Montgomery border to the city of Frederick and sits between Interstate 270 and Route 355. County planners chose the location to keep development close to the highway.

"It makes it easier for a company to come if the land is zoned [for commercial use] rather than saying 'Here's a farm, develop it,' " said Marie Keegin, executive director of the county's Office of Economic Development.

Natelli's project lies in the re-zoned corridor, and it is meant to become a place where people can work and shop close to their homes, he said. His firm has already built about 1,200 houses that cost from $300,000 for a townhouse to $900,000 for a single-family house.

Natelli will start building a Giant Food supermarket early next year, and it expects to build, depending on market demand, more offices for biotech firms and financial services and data-processing companies.

County officials say they encourage companies to come to Frederick not only to add to the business base but also to alleviate worsening road congestion. About 40,000 residents commute each day on Interstate 270 to jobs in Montgomery County and other places farther south.

"A lot of the companies we approached are companies that are located in Montgomery County but have a large percentage of their employees who live in Frederick County," said T. Wesley Poss, a partner at Millennium Development Group in Frederick.

Millennium is developing 275 acres of an office park in Frederick that is to include 300 apartments. The firm plans to add retail space and walking paths between the office buildings, which will be geared to tenants ranging from medical and professional service companies to biotech firms.

Other projects are also in the works. Next to Natelli's development in Urbana is another large office project called Knowledge Farms, which developers are trying to pitch as a 35-acre campus for biotech and other technology-related companies.

The Knowledge Farms developer -- Tyler-Donegan Real Estate Services of Frederick -- plans to begin construction in the next few weeks of a 40,000-square-foot building for its headquarters offices. The firm has signed up an insurance company and an architect as tenants, and it is in talks with a biotech company, executives said. In the next three years it plans to build an additional 360,000 square feet of offices there, said Brian Duncan, a partner at Tyler-Donegan.

Developers and planning officials have expressed particular interest in bringing more biotech companies to Frederick County, which is home to the Army's Fort Detrick, one of the nation's top biodefense research centers. They say the county could be a better location for biotech firms than Montgomery, already a research hub that is home to the National Institutes of Health and other government agencies, because land in Frederick is cheaper and taxes are lower.

To catch the attention of the biotech sector, the county is offering incentives, including loans, grants and bonds that can be repaid from the property taxes of a project. Using such incentives, the county encouraged MedImmune Inc., the maker of the nasal flu vaccine FluMist, to build a manufacturing facility in Frederick. MedImmune has its corporate headquarters in Gaithersburg. Earlier this month, BioPort Corp. of Lansing, Mich., received $13 million in state and local economic incentives to expand a facility in Frederick to produce anthrax vaccine doses.

Some biotech companies say they want Frederick to offer more financial incentives to get biotech operations to locate and expand there.

"It's a little under horse-powered," said Peter L. Nara, president of Biological Mimetics Inc., a biotech company that he started in 1997. Its six-person office is in a research office park near Fort Detrick and develops vaccines for such things as the common cold, hepatitis C and HIV.

"There are efforts made by the county and the state of Maryland, but Montgomery County is way ahead of the curve," Nara said. "Frederick is doing a little bit of catch-up."


Wells Real Estate Investment Trust Inc. paid $82 million for 3100 Clarendon Boulevard, a 238,000- square-foot office building in Arlington. The building was sold by Jamestown, a real estate company, that is based in Atlanta.


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