With the Department of Defense on course to close 33 domestic military bases and realign 30 others, real estate developers are identifying sites for potential redevelopment opportunities. The shuttered bases will save the government $50 billion over the next 20 years.

While decommissioned bases certainly have development potential, they also present a unique risk and reward profile for developers bent on reinventing them. What's more, it's difficult to follow any established model since the few base redevelopments that have been completed are only a few years old.

Considerations vary from environmental concerns to economic issues and bureaucratic hassles. The land under the Navy's oldest submarine base in Groton, Conn., for example, is tainted by sulfuric acid, torpedo fuel and waste oil. That base — which is expected to close this year — is so polluted that the Navy will spend $23.9 million to clean up the mess over the next few years. Even after remediation is done, it's uncertain whether the land will be deemed habitable.

“If you have the willingness to deal with the environmental mess usually left behind by the military, and the gumption to convince local authorities that you mean well, opportunities definitely exist for redevelopment strategies,” says Brian Lambert, a real estate economist at Boston-based Property & Portfolio Research (PPR).

Then there's the economic issue. A base closure can wreak havoc on the economies of small communities that rely on their military base for jobs, says Sheldon Gross, principal of West Orange, N.J.-based real estate brokerage Sheldon Gross Realty.

“It's really simple. If the base closes, people will move away,” Gross cautions. “Why would people live there if there were no jobs?”

Gross' office is located in Monmouth County, where army base Fort Monmouth is slated to close. Local business leaders in the small town of Fort Monmouth, N.J. are already voicing opposition to the plan.

The base employs 5,200 workers and is one of Monmouth County's largest employers. These numbers, which indicate that the local economy is heavily dependent on the base, suggest that the redevelopment potential at Fort Monmouth is limited.

Yet the fate of decommissioned bases that reside in the shadow of larger cities is another story. “The bases that are located near major metro areas will clearly fare better than the remote bases,” says attorney Richard Gold, a partner at Washington, D.C.-based law firm Holland & Knight. Gold, who handles the public policy and regulation practice, adds that large metro areas often sprawl into these former base sites. That, in turn, sets the stage to develop lucrative multifamily and retail projects.

But developers need patience for these projects. As Lambert of PPR notes, it takes an average of six years for the land to completely transfer from the government to the private owner. “There's some real lag time between getting the land and building on it,” adds Lambert. “It may even be too early to gauge how well any of the base redevelopments completed in the past five years have done.”

Realigned bases should also present development opportunities. According to PPR, many of the realigned bases will house additional military personnel, which should have a positive trickle-down effect on office and warehouse properties.

The Washington, D.C. and Northern Virginia corridor, in particular, should benefit from these realignments. PPR projects that this area will add 15,300 military jobs over the next few years. Norfolk, the largest naval base on the East Coast, will add roughly 7,500 jobs over that period, while Indianapolis will generate some 3,500 new jobs.

WINNERS & LOSERS

While some metro areas will get pinched because of military base closures, others stand to benefit from base realignments.