One of the two keys to good real estate deals is location, location, location. The other is having an eager seller. President Donald Trump is probably too busy fighting with congressional Democrats over his promise to build a wall on our Southern border to have noticed that there is a good real estate deal to be made that easily will pay for the wall, perhaps even getting Mexican or Chinese buyers to hand over the needed cash. The eager seller is the U.S. military. And the locations are its many urban and coastal installations being crowded by Trump induced local economic prosperity.
For years, the military has been complaining about the budgetary burden of carrying excess property. The estimate is that more than 20 percent of our domestic bases are surplus, costing billions annually to maintain. The normal process for getting rid of the excess involves convening a Base Closure and Realignment Commission (BRAC), which decides which facilities are surplus or in need of being moved, producing a list the Congress then cannot easily change.
The problem is that past BRACs have given up some pretty terrific locations—Governor’s Island in New York City, Fort Sheridan near Chicago, the Presidio in San Francisco, and El Toro Airbase in Orange County. The local communities got some great parks and civic facilities, a few favorite developers got the deal of a lifetime, and the federal government got bupkis. Well, the federal government did get to pay the environmental clean-up costs and the costs of moving any vital facilities elsewhere, but basically bupkis. When the BRACs closed bases in undesirable locations, the federal government got the task of replacing military employment with other federal subsidized employment—accounting facilities, prisons and colleges.
The opportunity is there for a much better deal. First, we make a list of desirable military locations. I am thinking Newport RI, the home of the Naval War College, Fort McNair in Washington DC, the home of the National Defense University, the U.S. Naval Academy at Annapolis Maryland, the Los Angeles Air Force Base, just off the 405 and the home of the Air Force Missile and Space Command, and the Marine Corps Recruit Depot in San Diego, among others. With a little juggling, we could find homes on other military bases for these facilities, at least the ones still deemed necessary after a review. For example, I am sure they could squeeze the Naval War College, if it survives the cut, into the Portsmouth Naval Shipyard in Kittery Maine. But the big point is all that good acreage in Newport, DC, Annapolis, LA and San Diego would go out to the highest bidder. There are tens of billions of dollars there for the wall.
With some creative real estate thinking much can be accomplished. The military gets to use its bases more efficiently. Some rich people in Mexico City or Moscow get to invest their money in a safer place. The country gets a wall along the Southern border without a Congressional appropriation, the President gets to keep his promise, and a lot of us get to buy condos with a view of Narragansett Bay or San Diego Harbor. It is a win-win deal as we say in the real estate business.
Harvey M. Sapolsky is Professor of Public Policy and Organization, Emeritus, at MIT and the former Director of the MIT Security Studies Program.