USPTO Downsizes HQ; Building Owner Faces Financial Troubles

The U.S. Patent and Trademark Office (USPTO) has called their 2.4 million square foot headquarters in Alexandria, Virginia home since 2005. But the agency does not actually own the cutting-edge facility located in the Carlyle neighborhood near the Potomac riverfront. Instead, the USPTO has leased the complex from New York-based real estate owner LCOR.

Several months ago, the USPTO announced it would be downsizing and relinquishing 800,000 square feet of space. The renewed 5-year lease covers 1.6 million square feet.  Still a big footprint, but one reflective of how the USPTO’s workplace and workforce have evolved over the past two decades.

When the agency first moved in, hoteling and work-from-home examiner programs were in place, but not the expectation. Fast forward to today and the USPTO has fully embraced telework along with opening satellite offices nationwide, reducing the need for everyone to be housed at HQ. Despite major examiner corps growth during this time, the footprint no longer needs to be so large.

However, the USPTO’s landlord LCOR now faces its own challenges filling the soon-to-be vacant space. The company continues to struggle finding replacement tenants, as office vacancy rates remain high nationwide.

Most recently, credit rating agency Moody’s downgraded LCOR’s credit outlook to “high risk of default” status. The downgrade reflects Moody’s view that LCOR may have trouble refinancing debt and have insufficient cash flow to cover interest payments unless new paying tenants are found.

I remember first visiting HQ way back then and thinking of the potential benefits of having a patent law office in an adjacent building.  Today, that imagined benefit seems much less so as it is likely that your examiner is sitting at home in another state.