Investors have renewed their interest in office properties in the Washington, D.C. central business district (CBD) based on increasing tenant demand. The market is putting a higher value on the built-in amenities that exist in the CBD, like dining and entertaining options, transportation accessibility and architecturally timeless buildings. We can always tell the center of gravity of a city by where the brokerage shops locate. In D.C., CBRE’s latest move to the CBD from the East End puts all of the agency brokerage shops within feet of each other. With a healthy stock of historically significant, well-built office properties with value-add potential, the CBD is primed to continue its office renaissance. Transportation Infrastructure While the existing public transportation infrastructure in the CBD is an important factor driving businesses back to the submarket, shaving 20 to 30 minutes from commute times — whether by car, bus or train — is decidedly attractive to today’s employers. Combined with the variety of established dining, entertainment and hospitality options in the CBD, transportation is vital to attracting high-profile employers. The city’s law firms in particular have taken note. Over 20 notable practices have relocated their offices to the CBD in the last year alone. …
The 195 million-square-foot Washington, D.C., metropolitan industrial market features various sectors and centers of demand across the region. The overall market has been extremely healthy, with unique forces impacting the area’s primary regions of Northern Virginia, Suburban Maryland and Washington, D.C. The overall metro market expanded between first-quarter 2017 and first-quarter 2018. Net absorption in the period was 1.7 million square feet, albeit a significant slowdown from the previous 12-month cycle (4.2 million square feet). After falling significantly during the past five years, vacancy remained relatively flat in first-quarter 2018 and settled at 6.8 percent, a 10-basis-point drop year-over-year. A lack of available space limited opportunities for occupancy gains but allowed owners to increase asking rents. The average asking rent rose sharply to $10.04 per square foot, up from $9.58 per square foot one year earlier. Of the 1.9 million square feet of new supply under construction, 1.3 million square feet was in Northern Virginia’s less constrained but in-demand Loudoun County. Overall new supply was 55 percent preleased at the end of the first quarter. The Washington metro industrial market inside the Interstate 495 Beltway contrasts in many ways to the market outside the Beltway. The most significant difference is …
On the surface, the Washington, D.C., metropolitan office market has shown little change over the past five years. But dig a little deeper, and some interesting trends emerge. Metro D.C.’s office market totaled 377 million square feet as of the third quarter of 2017 and recorded a vacancy rate of just under 15 percent — inclusive of sublease space — and cumulative net absorption of 600,000 square feet year-to-date. The market has demonstrated little change in major market indicators over the last five years. Notably, three of the last five years (2012 to 2016) recorded negative absorption on a regionwide basis — averaging 82,000 square feet annually. Overall vacancy levels have thus far been held in check in part due to vacant buildings being removed from inventory for renovation and retrofitting or for conversion from office to other uses such as schools and residential. Nevertheless, core submarkets and micro-markets are benefitting from occupancy growth and rental rate increases, with tenants demonstrating a decided preference for amenity-rich areas. Tenant Preferences Regionally, the office segment is characterized by flight to quality and tenant-leaning leasing conditions. Tenants continue to favor efficient space design. They’re relying more heavily on building amenities such as conference …
BETHESDA, MD. — Government Properties Income Trust (NASDAQ: GOV) has agreed to purchase all of the outstanding shares of First Potomac Realty Trust (NYSE: FPO) in a deal that is valued at $1.4 billion. The all-cash transaction, which includes the assumption of debt, is expected to close before the end of 2017. First Potomac shareholders will receive $11.15 in cash per share, or about $683 million in aggregate, at the close of the transaction. This represents a premium of about 9.3 percent to First Potomac’s 30-trading day volume weighted average price, based on a period ending April 24, 2017. The remaining transaction value includes the expected repayment of about $418 million of FPO debt and an assumption of about $232 million of FPO mortgage debt, as well as the payment of transaction fees and expenses. FPO has agreed it will not pay any distributions to its shareholders before the transaction closes. GOV’s distributions to its shareholders will not be impacted by the transaction. First Potomac maintains an office and industrial portfolio of properties that are located primarily in the metropolitan Washington, D.C., area. FPO’s portfolio includes 39 properties (74 buildings) with about 6.5 million square feet that was 92.2 percent …
There are many things to be optimistic about in metropolitan Washington, D.C.’s multifamily market. Here are some facts to consider: — The D.C. metro multifamily vacancy averages 3.4 percent compared to the national average of 4.5 percent. — The D.C. region has seen $3.174 billion in multifamily sales activity year-to-date with an average cap rate of 5.2 percent. — Private investors are leading multifamily sales activity in the D.C. metro region and responsible for 64 percent of the deal flow. — Multifamily investment sales are up by 4.5 percent compared to the first half of 2015. — An influx of new workers to fill the 92,500 new jobs added in the last year has heightened demand for multifamily units despite an abundance of new supply. With a low unemployment rate of just 4.1 percent and job growth far exceeding the national average, and at its highest point since December 2000, the Nation’s Capital is humming with activity. Last year, D.C.’s multifamily market saw staggering amounts of new construction deliver with net absorption levels that surpassed all expectations. Many of the young workers are interested in an urban live-work-play environment ripe with amenities and relish the opportunity to decrease commute times …
The building height restriction — enacted in Washington, D.C. to preserve picturesque views of the United States Capitol Building and the Washington Monument — helps provide clear and exceedingly stunning views of the multitude of construction cranes that currently dot the vertical landscape of the District of Columbia. The majority of these yellow-steeled economic generators are being used to develop new residential and mixed-use projects, ranging from the NoMa district to the southeast Waterfront area and weaving through the neighboring suburbs, including Loudoun, Va., and Bethesda, Md. And, where new residential goes, supporting retail always follows, including the trendiest grocery store chains and hottest fast-casual and dine-in restaurant concepts. In addition, the area’s ever-expanding transportation network that provides a daily lifeline to D.C. and suburban workers is also paving the way for new retail opportunities as our Nation’s Capital continues to retain its reputation as among the most prolific retail locations in the country. Downtown Core Residential-only or mixed-use projects currently underway in the District are too numerous to mention, but here is a glimpse into the frenetic activity as there appears to be a bottomless appetite for new housing, particularly among Millennials. MRP Realty is developing the 1,600-unit Rhode …
The Washington, D.C., metropolitan industrial market, spreading from Frederick County, Maryland to the north, Prince William County, Virginia to the south and as far west as Loudoun County, Virginia is ideally situated between I-95 and I-81 — major transportation corridors that allow shipments to easily reach much of the country. The industrial market has improved more quickly than other sectors and fairly dramatically to the point where much of the region can be described as land-constrained and under-supplied. Certain industrial sub-segments, such as data centers, have impacted the availability of warehouse and distribution space in key locations for optimal supply chain design. As of the third quarter of 2016, the area’s industrial market totaled 190 million square feet (inclusive of flex space), divided almost equally between the markets of Suburban Maryland (90.6 million square feet) and Northern Virginia (90.2 million square feet). The District of Columbia comprised 9.2 million square feet, and 1.5 million square feet was under construction region-wide. Approximately 4.2 million square feet has been absorbed year-to-date, and vacancy was 7.9 percent — a 250-basis point decrease from 10.4 percent reported as recently as year-end 2013. In comparison, the office market has ranged from 14 to 14.9 percent …
WASHINGTON, D.C. — First Potomac Realty Trust (NYSE: FPO) has sold Storey Park, a mixed-use project currently under development in the NoMa submarket of Washington, to 1005 LLC for $54.5 million. When completed, Storey Park will include 350,000 square feet of office space, 65,000 square feet of retail and 300 loft apartments. An estimated completion date was not disclosed. The buyer is a partnership between Perseus Realty LLC and W-G Capital LLC, an affiliate of Four Points LLC and Greencourt Capital. First Potomac and Perseus Realty jointly acquired the site in August 2011, with First Potomac owning a 97 percent interest. The proceeds from the sale were used to repay a $22 million land loan at the property, and First Potomac used its portion of the remaining proceeds to repay outstanding borrowings on its unsecured revolving credit facility. Perseus Realty began as a Washington, D.C.-focused investment firm in 2004 and has created a development portfolio within the metropolitan area. W-G Capital is a Washington, D.C.-based private equity firm focused on real estate investments in the United States with a particular focus on the northeast corridor and the nation’s capital. FPO is a real estate investment trust that owns, operates, develops and …
WASHINGTON, D.C. — Following a nine-year renovation process, The Watergate Hotel in Washington, D.C. has reopened its doors after $125 million in upgrades. New York-based developer Euro Capital Properties owns the famous hotel property, which had been closed for renovations since 2007. The hotel consists of 336 guestrooms, half of which include balconies, and 32 suites. Located on the banks of the Potomac River at 2650 Virginia Ave. N.W., The Watergate Hotel was originally designed by Italian architect Luigi Moretti in 1961 to look like a sail on the river. It opened in March 1967, and its name is synonymous with the political scandal that started with a break-in at the Democratic National Convention headquarters, which was located in an office complex connected to the hotel. The scandal would eventually lead to the 1974 resignation of President Richard Nixon. For the renovations, Ron Arad and Italian design firm Moroso added curves and mid-century modern design, while restoring some of the hotel’s original structures such as its staircase and indoor pool. Architectural and interior design firm BBGM was the architect for the project. “The Watergate is undoubtedly one of the most glamorous and illustrious hotels in the world,” says Rakel Cohen, …
Over the last year, metropolitan Washington, D.C.’s multifamily market has seen staggering amounts of new construction deliver, with net absorption levels that have surpassed all expectations. This is likely a result of similarly unexpected rates of job growth in the area and the remarkable resiliency of the metro D.C. economy as a whole. Among the major metropolitan markets around the country, metro D.C. — with the sense of permanence lent by the presence of the federal government — has historically been the most stable year to year, making it one of the safest bets for investors. Yet, given the massive amount of supply in the pipeline in recent years, the multifamily market has suffered a degree of hesitancy from investors fearing supply would outpace demand. However, this trend has reversed in the last 12 months, during which a record-setting 13,800 Class A multifamily units were absorbed. That figure jumps to 16,484 with Class B product in the mix. For all investment-grade apartments, stabilized vacancy has dropped 50 basis points to 3.7 percent. Class B units in particular have experienced excellent rent growth, rising 3 percent annually, while Class A maintains a growth rate of between 1 and 2 percent. Although …
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