FORT GEORGE G. MEADE, Md. (Army News Service) -- Rather than have the U.S. government dole out millions of dollars to demolish a vacant research lab, located on the site of the Army's old flagship medical center, Army officials have saved it for a new owner -- a children's hospital.

The 348,000-square-foot lab, along with almost 12 acres of land around the former Walter Reed Army Medical Center in the District of Columbia will be officially transferred Thursday to the Children's National Health System, a not-for-profit provider of pediatric care.

With the move to reuse the lab, a demolition cost of over $10 million was avoided. The property's caretaker expenses, costing the Army hundreds of thousands of dollars each year, will also be freed up for other installation-related projects in the service, according to officials.

"Obviously, our intent is try to get rid of a property as quickly as possible, because we don't want to pay those costs for any longer than we have to," said Andrew Napoli, a program analyst for the deputy assistant secretary of the Army for installations, housing and partnerships.

Formerly the Armed Forces Institute of Pathology, the lab was designed for high-end research that once housed dangerous pathogens, such as anthrax, in a reinforced building that could withstand an atomic blast, Napoli said.

"It was very expensive to demolish and not suited for any use other than the lab it was constructed to be," he said.

As a result of the Base Realignment and Closure Act of 2005, the Army shuttered the Walter Reed site and relocated a few miles to the northwest in Bethesda to consolidate its operations with the National Naval Medical Center.

The Army then began to divvy up the roughly 100-acre site. In October, the DC local redevelopment authority paid $22.5 million for more than 60 of the acres that will be converted into a mixed-use destination to provide economic growth for the area, officials said.

Another 32 acres were transferred last year to the State Department, which plans to turn the area into a foreign missions center to create additional embassy space for foreign governments.

Congress authorized the last portion of the site, the 12-acre parcel with the lab, to be transferred to a public health recipient. After three years of discussions, the Children's National Health System took it over.

"We are thrilled about the generosity and support of the U.S. Army that made this possible," said Dr. Kurt Newman, the health system's president and CEO.

Newman, a former pediatric surgeon who conducted research at the former pathology institute, said he has a great respect for the tradition at the old Walter Reed site, whose history dates back to the early 1900s.

Keeping the structure intact as a research lab, he said, will help pay tribute to its past.

"I love the idea that we'll be able to uphold that legacy," he said. "It'll be different, but I think having worked with the Army on bringing this transfer to a successful point, I want to continue to find ways to honor that legacy. I think pediatric research is one of those ways."

With its prime location in the DC area and near his organization's headquarters, Newman said they plan for it to be a world-class research hub.

"This is really the sweet spot," he said. "We feel that we could be a transforming catalyst for more research and innovation. What that exactly looks like, I can't tell you yet. The vision we have is that it will be a real hub for innovation and research for pediatric medicine."

It would have been a shame, he added, if the government chose to bulldoze the area and start from scratch.

"If those buildings got demolished and it became something unrelated to what had happened there before," Newman said, "I think that would have been a huge missed opportunity."

That's something Army officials wanted to do all along, said Paul Cramer, the deputy assistant secretary of the Army for installations, housing and partnerships.

"That's what we consider a tenet of our base closure reuse [plan] -- is that facilities do get reused," Cramer said. "If there's a match between the use of a facility under Army control and there's a direct correlation to the public's use doing the same thing, that's a win, win."